Sri Lanka to continue tight macro-management after IMF deal: CB Governor

July 4, 2011 (LBO) – Sri Lanka will manage macro-economic policy prudently on its own after an International Monetary Fund deal ends in December, Central Bank Governor Nivard Cabraal said. Coomaraswamy said Sri Lanka has had a history of deficit spending and high inflation over the past 30 years and a seal of approval by the IMF could improve confidence.

“This can strengthen the hands of those in government who are committed to fiscal prudence,” he said.

Sri Lanka went for a 2.5 billion dollar bailout (stand-by arrangement) from the IMF after running into a balance of payments crisis in late 2008. The IMF has reduced its quarterly monitoring to half yearly ones this year.

Coomaraswamy said Sri Lanka could go for an IMF ‘staff monitored’ program without actually increasing borrowing so that the country could benefit from regular oversight and reports.

The IMF monitors the country now under the program and also as part of its regular ‘Article IV’ consultations. But the staff reports have not been made public in the recent past.

“We have reached a maturity where we can manage on our own,” Cabraal told an economic forum organized by Sri Lanka’s biggest business chamber,