• IMF highlights need for credible and coherent strategy to restore macroeconomic stability
• Says SL has indicated it is actively considering an IMF-supported programme
• Fin. Minister Basil Rajapaksa to visit Washington in April
• CBSL Governor Cabraal goes mute on decision to seek IMF support after strong denial 

The International Monetary Fund (IMF) made a formal announcement this week stating that it intends to kick off discussions with Sri Lanka to support the national economy. 

IMF spokesman Gerry Rice said the international financial institution has highlighted the urgent need to implement a “credible and coherent” strategy to restore macroeconomic stability and debt sustainability or protect vulnerable groups through strengthened well-targeted social safety nets. 

Rice made his comments while addressing a press briefing on March 17. 

“We stand ready to discuss all options for Sri Lanka,” he said. 

The IMF concluded this week in Sri Lanka its Article IV consultation. Following the consultation, the agency recommended a gradual return to a market-determined and flexible exchange rate. The recommendation was made so that external adjustments can be facilitated and international reserves can be rebuilt. 

Rice also affirmed that the relevant authorities in Sri Lanka have indicated they are actively considering an IMF-supported programme. 

“We will discuss with the authorities how best we can assist Sri Lanka going forward, including during the Finance Minister’s visit in Washington in April,” said Rice. 

President Gotabaya Rajapaksa during his address to the nation regarding the ongoing economic crisis announced that the government has decided to work with the IMF to explore a sustainable solution for the country to repay its foreign debt and build back its foreign reserves. He said that subsequent to his discussions with the IMF, he has decided to work with the agency after examining the advantages and disadvantages. 

President Rajapaksa met with a visiting IMF Asia-Pacific team on Tuesday (15). The team consisted of IMF Asia Pacific Director Changyong Rhee, Deputy Director Anne-Marie Gulde-Wolf and Sri Lanka resident representative Tubagus Feridhanusetyawan. 

The visiting officials also met with Basil Rajapaksa and Treasury Secretary S.R. Attygala. However, none of the meetings saw the participation of Central Bank Governor Ajith Nivard Cabraal, who strongly maintained that Sri Lanka would not go to the IMF to solve the issues prevailing in the economy but instead would opt for home-grown solutions.

 Since the announcement of Sri Lanka working with the IMF, Cabraal has made no comments whatsoever on the move. 

The IMF has repeatedly called for tighter monetary policy to stop liquidity injections, which create forex shortages.