Basil will go to the IMF in April

Govt initiates contact to start dialogue as forex crisis worsens; country report discussed; Indian trip rescheduled

Finance Minister Basil Rajapaksa is to visit the International Monetary Fund (IMF) and the World Bank in April when the two lending institutions hold their annual Spring sessions.

The Sunday Times learns from high- ranking sources that the Government has initiated contact with both the IMF and the World Bank for the Finance Minister to visit Washington D.C. to start a dialogue on the feasibility of seeking their support to ride over Sri Lanka's current economic crisis.

If the discussions succeed, it will entail proceeding towards negotiations between the Government and the IMF in formulating a programme that will see an infusion of foreign exchange to stabilise the economy followed by likely austerity measures and fiscal reforms that will be prescribed by the Fund and agreed to by the Government.

The move comes in the backdrop of months of internal debate on whether the Government should go for an IMF bailout due to the economic complications the country is facing due to a dip in foreign reserves resulting partly from the global COVID-19 pandemic and huge foreign debts amounting to over USD six billion to be repaid just this year alone.

The Cabinet which recently discussed the pros and cons of going to the IMF was divided on the matter, while the Central Bank Governor has steadfastly opposed the move and expressed confidence that the country can ride the current economic storm.

The IMF's Board of Directors was yesterday to discuss its 'Article IV', the country report on Sri Lanka prepared by its economists dealing with economic and financial developments. The report was certain to include a Debt Sustainability Analysis.

On Friday, the IMF Board had discussed the situation in Pakistan which has already gone in for an IMF bailout due to its own debt crisis similar to that of Sri Lanka. Sri Lanka would have been represented by its Alternate Director at the IMF, Chandranath Amarasekera, Director of Economic Research at the Central Bank at these discussions.

Finance Minister Rajapaksa is the Governor for Sri Lanka at both the IMF and the World Bank.

Meanwhile, the Finance Minister's scheduled meeting with the Indian Government in New Delhi on Friday to wrap up the USD One billion emergency loan facility to Sri Lanka for the purchase of fuel, food and medicines was cancelled at the last minute. Neither New Delhi nor Colombo gave any formal reason for the cancellation.

A spokesman for the Indian High Commission in Colombo said the visit had to be put off because Foreign Minister Subrahmanyam Jaishankar was not available to meet the Sri Lankan Finance Minister. The Ministry of Foreign Affairs spokesperson told the Sunday Times that the visit of the Finance Minister was being directly handled by the Finance Ministry and they were unaware of the details.