Sri Lanka may consider IMF option: Finance Minister

Sept 30, 2015 (LBO) – Sri Lanka may consider an International Monetary Fund program option after the budget but only under our terms and conditions, Finance Minister Ravi Karunanayake told Lanka Business Online.

“It will only happen on our terms,” Karunanayake said.

Sri Lanka will have the option of considering bilateral lenders or an IMF option to support foreign reserves with considerable interest from lenders to support development projects in the island.

The budget is due to be presented on November 20, which will contain fiscal policies of the government elected into power in August.

On the external front, the trade deficit narrowed in July although, on a cumulative basis, the deficit during the first seven months of 2015 increased by six percent to 4,688 million dollars.

The overall balance of payments recorded a deficit of 1,205 million dollars during the first seven months of 2015 in comparison with a surplus of 2,016 million dollars during the same period last year, which has pressured foreign reserves.

Sri Lanka’s gross official reserves stood at 6.8 billion dollars as at end July 2015, equivalent to 4.2 months of imports, with total foreign assets amounting to 8.4 billion dollars, or 5.2 months of imports.

Lenders such as the ADB have said that overall lending could increase to two billion dollars over the next three years from the current 480 million dollars.

Japan has also shown considerable interest in increasing developing lending to Sri Lanka, Karunanayake said, and has been a concessionary lender since the 1950s.