Dec 03, 2014 (LBO) – Sri Lanka’s inflation is easing and has weathered recent external turbulence well but the country has to be careful about external borrowing and effects of recent rate cuts, the International Monetary Fund has said. In the first post-program monitoring discussion with Sri Lanka, the IMF has also warned against a rise in bad loans.
Bad loans usually rise after a credit bubble burst and a period of low interest rates end.
IMF Executive Board Concludes Ex-Post Assessment of Exceptional Access Under the 2009 Stand-By Arrangement and First Post-Program Monitoring Discussion with Sri Lanka
On November 27, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the Ex-Post Evaluation of Exceptional Access under the 2009 Stand-By Arrangement (SBA), and the first Post-Program discussion with Sri Lanka.1
Sri Lanka’s need for IMF support under the 2009 SBA was triggered by the onset of the global financial crisis, and set against a backdrop of rising fiscal and external vulnerabilities. These circumstances also coincided with the end of its decades-long conflict, necessitating international support in order to avert a potential balance of payments crisis. In July 2009, a 20-mon