Sri Lanka IMF talks continuing on stalled review

Sept 25, 2011 (LBO) – Discussions are continuing with Sri Lanka on a periodic review under an International Monetary Fund bailout program which has supported the island’s policies aimed at restoring stability and growth, a top IMF official said. “We will continue these discussions for the coming review, while they (Sri Lanka’s delegation) are here in Washington,” Singh said Saturday.

“Our program is in force, and will continue through next May.”

IMF doesn’t usually terminate a program and it is up to country authorities to allow a deal to fall by the wayside.

Sri Lanka’s central bank intervenes on both sides of a peg of around 110 rupees to the dollar buying and selling small quantities in the forex markets. But net sales of foreign exchange began to gather pace from around the second quarter of 2011, amid stronger domestic credit growth.

From April to end July net sales by the monetary authority in transactions with commercial banks were 581 million US dollars according to official data.

Since then according to one estimate more than 600 million dollars in interventions have been made. Liquidity in money markets has run down amid dollar sales and shortages ha