Sri Lanka will be more attractive to investors after IMF bailout: CB official

Apr 14, 2009 (LBO) – Sri Lanka will become more attractive for investors once an International Monetary Fund stamp of approval comes with a bailout package, a top central bank official has said. “Once the IMF come in there would be more confidence, where you will find more development partners and foreign investors who would come in and invest,” Nandalal Weerasinghe, chief economist of the Central Bank of Sri Lanka told reporters after releasing the 2008 annual report of the monetary authority.

“So that way investment would be much higher than if there is no IMF. So that will have some impact on growth as well.”

The central bank is forecasting growth at 2.5 percent in 2009, down from 6.0 percent in 2008, though central bank governor Nivard Cabraal says an ‘optimistic’ estimate would put growth as high as 4.5 percent.

Sri Lanka said it originally applied for a 1.9 billion US dollar bailout at least.

IMF bailouts, known as ‘stand-by arrangements’, are usually the end result of past fiscal and monetary mis-management.

But under an IMF stand-by arrangement some fiscal restraint and brakes on money printing and government expenditure is expected, which will restore economic