Size of IMF programme yet to be known; request for emergency assistance remains- Central Bank

• Debt restructuring remains sticking point for both programme support and emergency assistance 

How much Sri Lanka would be able to access from the International Monetary Fund (IMF) or what is referred to as ‘access level’ in the Fund’s parlance is too early to be determined as the two parties are still at the early stages of negotiations for a package of assistance, according to the Central Bank Governor Dr. Nandalal Weerasinghe. 
Sri Lankan authorities including Finance Minister Ali Sabry made explicit that they expect between US$ 3-4 billion from the IMF under an Extended Fund Facility (EFF)—a medium term economic stabiliSation programme, which typically runs for about 3 years. 

“Access level under any Fund programme is basically determined once you make an official request or what they call a Letter of Intent. Once you sign that, then it will contain if it is going to be 100 percent of quota or 400 percent of quota,” said Dr. Weerasinghe making clarity on what determines the quantum of funding that Sri Lanka may get access to.     

Sri Lanka currently has access to 600 percent of its quota.   
Under a 600 percent quota, Sri Lanka received US$ 1.6 billion under a Stand-By Arrangement from the IMF, which ran from 2009 to 2012, when the country faced balance of payment troubles in 2009. 

But, the authorities believe that in the present context, the 600 percent quota should work out to an access level of between US$ 3-4 billion if the IMF Board approves.   Dr. Weerasinghe is confident that the disbursement could begin as early as in four months following a Staff Level agreement in three months. 

“I am very confident that we can reach an agreement with the IMF in the next three months and get some money disbursed,” he said.  Meanwhile, although many think that emergency assistance under a potential Rapid Financing Instrument (RFI) is virtually dead, both Dr. Weerasinghe and Sabry said the request remains open but is contingent on how soon the country restructures its debt and regains debt sustainability.   

RFI is an emergency facility introduced during the pandemic by the IMF as emergency assistance to countries, which got exposed to external sector vulnerabilities due to the pandemic induced lockdowns and resulting loss of access to foreign inflows. 

Access to RFI does not require the member countries to meet any conditions and such funds are disbursed within a short period of time. However debt restructuring remains a sticking point for Sri Lanka to access such funds.