While Sri Lanka frequently engages with the International Monetary Fund (IMF) for technical assistance, and the two parties are also planning for the upcoming Article IV consultations towards the end of this year, the Central Bank reiterated that no discussions are held to the effect of a programme in the style of Balance of Payment support.

“There won’t be any IMF programme negotiated by Sri Lanka,” said the Central Bank Governor Prof.W.D. Lakshman, setting the record straight on the policy of the government in managing its economy despite the pressure on the country’s external obligations caused by the pandemic.

There are certain sections, here and abroad, who attempt to portray that the country’s economy is in dire straits to make a case for an IMF programme, which comes with strings attached. They essentially revolve around getting only one criterion right, i.e. ‘the tax-to-GDP,’ while all else is their secondary concern.  

Sri Lanka had a disastrous experiment with the IMF from 2016 to 2020, which plunged the country to its worst growth phase and eventually leading to the unseating of the then government after it brought in a new tax law which killed the spirits of both businesses and individuals alike.

Professor Lakshman however said there are ongoing discussions for various other matters with the IMF and even now there are couple of IMF experts working here.

“But there are discussions for various other activities, technical assistants and things like that.

Even now there are some technical people, experts working in Sri Lanka - one or two. And we are planning to have the Article IV consultations to be held towards the end of this year. So, those discussions are going on,” he said.

Article IV consultations is the IMF’s customary country surveillance, which typically happens annually. Under this , a visiting IMF Staff mission meets with various government officials, the Central Bank, legislators, businesses and a section of the civil society to assess the country’s economic and financial policies.