Tread Carefully

The International Monetary Fund says Sri Lanka will be hard pressed to keep its country reserves at pre-tsunami levels, as a heavy import bill will negate an inflow of dollars. The International Monetary Fund says Sri Lanka will be hard pressed to keep its country reserves at pre-tsunami levels, as a heavy import bill will negate an inflow of dollars. The Washington based fund made its observations, while approving Sri Lanka’s request to defer US$ 113.5 mn in interest payments due this year. Sri Lanka has also requested for around US$ 150 mn in emergency assistance, which accounts for 25 percent of its US$ 600 mn quota with the Fund.

“While some of the financing needs will be met by increased aid flows, preliminary estimates by staff indicate that Sri Lanka will be hard pressed to keep international reserves at the pre-tsunami level (about 2.3 months of imports), even after taking into account the proposed switch in repayments expectations during 2005 to an obligations basis,” the Fund said late Tue.

Sri Lanka’s reserves were brimming at US$ 2,147 mn end 2003, but nosedived the following year to meet a hefty fuel bill. Reserves have since perked up somewhat to end at US$