Recognition that country would not suffer another crisis:
If this programme is changed, the country’s progress will be severely hindered and jeopardized:
Finance State Minister Shehan Semasinghe emphasised that the approval of the second review by the IMF and the release of the third tranche in the process of taking the country’s economy to a new dimension by transforming it into a country that does not face an economic crisis again, is a guarantee provided on the success of building the economy of Sri Lanka both locally and internationally.
Semasinghe said that there were no conditions imposed on Sri Lanka in order to approve the second review of the third loan tranche of the International Monetary Fund (IMF).
State Minister Semasinghe said this during a special press conference that was held at the Ministry of Finance Auditorium yesterday (13) morning.
Pointing out that the government has taken decisions at the right time within a specific time frame amidst various challenges, Minister Semasinghe said that due to their success, the country’s economy has reached a stable level and if this programme is changed, the country’s progress will be severely hindered and jeopardized.
State Minister Semasinghe further said: “The Executive Board of the IMF has approved the second review regarding the release of the third loan tranche for Sri Lanka. Accordingly, the government acted with strong confidence that the third tranche would be released stating that it will be released.
“We received the first installment of the IMF in March 2023 and the second tranche was released in December 2023. Accordingly, by 2024, based on the staff level agreement we reached in March 2023, this third installment has been released. US$ 336 million will be released as the third loan installment and the IMF has worked to provide a total of US dollars 1 billion to Sri Lanka through these three installments. Basically, the IMF has appreciated the measures taken by the President and the government to build the economy of Sri Lanka and the implementation of the reform programme.
“We believe that the President, the people and the government made a lot of sacrifices in the process to save the country from the economic collapse of 2022 and move to 2024. We clearly said at that time that this reform process will be difficult in the short-term but will bring good results in the medium and long-term. After the initial difficult period, we have now reached the stage of getting results.
“One of the accusations that came as a government when we were engaging in discussions with the IMF was where the opposition groups said that the IMF is running the country today. We requested the support of the IMF as a country. We requested for their support as a country in March 2022. These discussions started from April 2022 and the necessary reform programme was discussed. The IMF has never forced any reforms or programmes on Sri Lanka. When we requested support in the current state of the country at the time, they have shown us the way to rebuild the collapsed economy and move towards an economy that will not collapse again and actions to be taken have been indicated at that time,” he said.
Decisions regarding public financial management, structural changes, moving towards a debt restructuring for debt management, measures to be taken as a government to eliminate identified weaknesses to create good governance etc. have been pointed out by the IMF. Then the government had to take a decision on the fact that by following this path, Sri Lanka will be made into a country with a good lifestyle that the people expect, or else we will live in a country where inflation will continue to rise without stopping the inflation rate of 70 percent in 2022. The President and the government had to take the decision on behalf of the people of the country. We made the right decision. We stand for it even today. Today it is being proven numerically that the decision taken at the time was correct.
“The approval of this installment will greatly help us to become more economically stable and strong. We are currently in the final stages of the debt restructuring programme. We have not entered into any adverse agreement with the bond holders. The IMF will not allow any unfavourable agreement. Our creditors have not influenced us. Discussions have been held with the bond holders. In our overall debt restructuring programme, we work mainly on two principles. It includes treating all creditors equally and dealing with transparency. We are implementing the debt restructuring programme based on these two principles.” State Minister Semasinghe said that the IMF has pointed out the importance of moving this programme forward as this is very important.
He said that taking this progression forward and avoiding moving into dangerous situations is clearly indicated. He said that in particular, the IMF press release mentions some of the unique works the IMF sees in the review that include the steps taken for public financial management, Government’s commitment to structural change and especially the commitment to good governance in the country.
The measures taken by the government to eliminate fraud and corruption have been appreciated by the IMF, he added.
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