Lanka’s economic conditions improving:

IMF third tranche under discussion

The overall economic conditions in Sri Lanka are improving and the economy is poised for recovery this year, said Head, International Monetary Fund, Dr. Brian Aitken issuing a statement at the conclusion of an IMF mission to Sri Lanka on Friday. He said, that the country’s external balances were strong and the inflow of foreign remittances were continuing at a high rate. Prospects for tourism and gross remittances remain at a satisfactory level.

The IMF team said, that they were not happy with the fiscal policy management but yet see the potential in the country for economic revival.

The disbursement of the third tranche will be delayed as the Government of Sri Lanka will have to address policy reforms. He said, financial sector reforms, budget deficit and domestic budget borrowing are some of the key issues that urgently need to be addressed.

“The Central Bank will be briefed on changes needed to be made when the team returns from Washington following the conclusion of the Parliamentary elections in April”, the Mission Head said.

“The delay in releasing the third tranche will not have an implications on the overall program for Sri Lanka”, the mission head said. For end-December the Government has met the targets agreed under the program for net foreign reserves and reserve money.

The issue at stake is the domestic budget borrowing exceeding by substantial amounts”, Dr. Aitken said. The IMF will remain engaged in a constructive dialogue with the Government with the aim of agreeing on policies to support staff’s recommendations to the IMF management for the completion of the current review of the Stand by Arrangement.

The IMF approved the US$ 2.6 billion loan as a Stand-by- Arrangement to Sri Lanka in July last year. The disbursement of tranches are subjected to review. (LF)