July 26, 2009 (LBO) – A 20-month International Monetary Fund backed economic plan will boost Sri Lanka’s reserves and provide a framework for donors to back post-war reconstruction, an official who led the mission to the island said. Though an immediate priority of the government was providing relief to refugees, reconstruction needs would grow over time, he said.
“[T]he IMF program would provide a framework in which the international donors can come in and help support the government’s considerable reconstruction needs over the next several years,” mission chief to Sri Lanka Brian Aitken said in a video statement posted on the IMF website.
“The main goal of the program is to re-build confidence to allow the economy to grow at a higher level and meet Sri Lanka’s growth potential,” he said.
“And that would certainly provide more resources to the government so that they can engage in important reconstruction effort.”
Aitken said a combination of runway budgets and short term foreign borrowing had got Sri Lanka into trouble.
“Sri Lanka had been running persistently high budget deficits for several years,” he said.
“And they borrowed to finance these deficits internationall