July 31, 2009 (LBO) – Sri Lanka would have got bilateral help if the International Monetary Fund did not cough up the cash, but the island now had an opportunity to ride on the endorsement by keeping to its targets, a top Indian official has said.
Though bilateral partners can pump money they have no capacity to push a country towards fiscal and monetary prudence. Under an IMF program quarterly reviews ensure that a country is kept in the straight and the narrow.
Kishore said the money itself was not important, but a message is sent out that an international body responsible for global financial stability is saying that Sri Lanka is now safe to invest in.
“It is the signal to the broad international markets in the finance and economic world that Sri Lanka has graduated from out of the crisis,” he said.
“It is in a position to put into good use the money which flow in, the environment is peaceful, it is productive and there is peace which has being established.”
The IMF program focuses on fixing Sri Lanka’s runaway budgets and has given an almost a free hand for the central bank to conduct domestic monetary policy, though some controls have been put on exchange rate policy.