IMF to engage with CB on macroeconomic modelling

A International Monetary Fund’s (IMF) technical team will be visiting Colombo shortly to work with the Central Bank on macroeconomic modelling and forecasting relating to Sri Lanka’s economic programme supported by them, the IMF sources said.

In this context, a special meeting was convened at the Central Bank by the IMF Country Representative with a group of journalists to seek their inputs on the most effective way to communicate complex economic policy-making issues.

However no specific policies were discussed at this meeting, the sources said.

Responding to a Business Times query on IMF board approval timing, Peter Breuer, Senior IMF Mission Chief for Sri Lanka noted that the proposed Extended Fund Facility (EFF) is awaiting board approval, which is contingent on the implementation of prior actions by the authorities and the progress with discussions with creditors on restoring debt sustainability.

It specifically requires receiving assurances from Sri Lanka’s official creditors to restore debt sustainability and the authorities making a ‘good faith’ effort to reach a collaborative agreement with private creditors, he added.

Central Bank Governor Nandalal Weerasinghe told a recent media conference that if Sri Lanka misses the board approval in December it plans to appear before the IMF Board in January 2023 and is optimistic that it would shortly receive assurance from bilateral creditors.

When asked to comment on CB Governor’s assertion, Masahiro Nozaki, IMF Mission Chief for Sri Lanka pointed out that it is difficult to predict the timeline for the board approval, as the process of debt discussions takes time.

All parties who are involved in the process should move expeditiously, so that Sri Lanka can emerge from the crisis as quickly as possible, he said adding that Sri Lanka’s quick return to sustainable growth would help to mitigate the worsening humanitarian crisis and also help restore the country’s repayment capacity.