IMF says no request from Sri Lanka for rescue package yet

• But says willing to discuss options if requested
• FinMin’s statement last week on seeking expert advice from IMF creates confusion
• Both CB and IMF confirm support sought was just technical and routine
• SL following home-grown fix to restructure its debt
• SL has US$ 4.5bn foreign obligations to be serviced per annum

Aday after the country’s Central Bank Governor refuted claims of talks for an International Monetary Fund (IMF) backed rescue package, the IMF Mission Chief in a written statement confirmed that they had not received any request for programme support from Sri Lankan authorities but are willing to discuss options if requested. On Wednesday, Finance Minister Basil Rajapaksa told media that the government had written to the IMF, seeking expert advice on the options that are available for the country to emerge from the economic hardships inflicted predominantly by the pandemic induced lockdowns in the last two years around the world.

Central Bank Governor Ajith Nivard Cabraal took to twitter the next morning to clarify that the engagement was part of a routine technical assistance programme on macro-fiscal capacity building for Ministry of Finance’s new macrofiscal unit and nothing to do with any programme support.

The next day, the IMF Mission Chief, Masahiro Nozaki in a written statement to the AFP confirmed it. “While the IMF has not received a request for financial support from Sri Lanka, the staff stands ready to discuss options if requested,” Nozaki had said.

While Sri Lanka has never flat out rejected an IMF-backed support programme given the external sector hardships being confronted, the current administration has first given priority to a home-grown debt restructuring programme to run its course.

While the current economic malaise facing Sri Lanka is not anybody’s making but predominantly caused by the pandemic, one must understand that seeking IMF support is one among many other options that is available for a country to overcome its problems, according to an economic analyst.

“It is like when you are faced with a serious personal problem, people can offer you various solutions but it is you who have to decide what you are gonna do based on your risk appetite and values. So, this administration has chosen to do it without the IMF as long as it could, and one has to appreciate that,” he said in response to the drumbeat of calls urging the government to go to the IMF. “But if they are not doing anything, it’s a different matter. But they are working on it”, he added. Some economic analysts say an IMF programme wouldn’t automatically unlock billions of dollars worth funds and resolve all the problems plaguing the country.