Cabraal expresses surprise over IMF’s response to China swap deal

Money and Capital Market and State Enterprise Reforms State Minister Ajith Nivard Cabraal yesterday expressed surprise over the response of the International Monetary Fund (IMF), with regards to Sri Lanka securing a US $ 1.5 billion currency swap facility with the People’s Bank of China.

During a press briefing on Thursday, IMF Communications Department Director Gerry Rice was quoted as saying that the IMF received a request from the Sri Lankan authorities for emergency financial support to fight the COVID-19 pandemic. 

He stated that the assessment of that support has taken longer than for other countries, due to “Sri Lanka’s daunting economic challenges and high public debt”. 

Rice also revealed that they have sought but not reached understanding on how to fulfil the key requirements for what could be a rapid financing instrument, which would include policies to continue ensuring debt sustainability to address the balance of payment challenges, including from the COVID-19 impact on tourism and to preserve international reserves. 

In response, Cabraal said, “The IMF’s response to the news that Sri Lanka has been able to secure a swap facility of 10 billion yuan (US $ 1.5 billion) from the People’s Bank of China is quite surprising.” 

“The request for COVID assistance was made by the government from the IMF early last year, at the time the COVID pandemic started. But the IMF was dragging its feet in providing that facility. 

Nevertheless, the government managed to effectively provide the necessary relief and support to the Sri Lankan people as well as maintain a framework of sound macro fundamentals, even without such financial support from the IMF,” he added.

An Extended Fund Facility programme Sri Lanka entered into with the IMF in 2016 expired in June, last year.