Cabraal says IMF advice for routine technical assistance programme, nothing more

Central Bank Governor Ajith Nivard Cabraal was quick to set the record straight with regard to Sri Lanka’s intention to reach out to the International Monetary Fund (IMF) for assistance.

Referring to the comments made by Finance Minister Basil Rajapaksa last evening where he shared that the government had sought advice from the IMF in tackling the current economic crisis, Cabraal said it was about a routine technical assistance programme and nothing more.

“Finance Minister’s comment regarding Sri Lanka informing the IMF to provide expert advice on the economic situation is about a routine Technical Assistance Programme on Macro-Fiscal capacity building for MOF’s new Macro-Fiscal Unit. Nothing else,” the Governor tweeted yesterday morning, tagging the Finance Minister.

Governor Cabraal has always maintained, and continues to do so, that the ongoing economic crisis can be solved following a home-grown fix as opposed to reaching out to international agencies for help.

While the Finance Ministry has hinted in the recent past that Sri Lanka might reach out to the IMF to ease the prevailing economic pressures, the Central Bank has been firm on its stance that such assistance is not required.
Cabraal, particularly, has been firm on fixing the economic hardships, tied predominantly to the foreign exchange challenges at present, through the domestic mechanism of debt restructuring before seeking external assistance.
According to the Central Bank, the plan is slowly falling in place with India approving US$ 1.9 billion worth bilateral assistance package in January, and bilateral talks with other central banks and governments are ongoing.

As opposed to economists, rating agencies and other commentators, Cabraal approaches the foreign debt issue from the standpoint of the cash flows and liquidity, instead of the amount of reserves that is available in relation to the debt repayments falling due in the next twelve months.    

IMF Managing Director Kristalina Georgieva in a television discussion with finance ministers and leading central bank governors around the world a fortnight ago said the pandemic policy would shape the global economic policy and thus billions of dollars spent on containing the virus would yield trillions of dollars worth economic returns in the future.