IMF delays third tranche of $2.6 bln Sri Lanka loan
By Shihar Aneez
COLOMBO, Feb 25 (Reuters) - The International Monetary Fund said on Thursday it is delaying the third tranche of a $2.6 billion loan to Sri Lanka after the government missed its 2009 deficit reduction targets.
IMF officials told a news conference that Sri Lanka's domestic budget borrowing -- consistent with a budget deficit target of 7 percent of gross domestic production -- was exceeded by a substantial amount.
"The third tranche will be delayed and completed when the budget is formulated after the election," said Brian Aitken, the IMF mission head to Sri Lanka.
The third tranche is worth just below $2 billion.
The central bank had earlier acknowledged that the $40 billion economy likely missed last year's budget deficit goal of 7 percent set by the IMF as a condition for the loan.
Analysts and economists believe the budget deficit may have exceeded 8.5 percent, close to the 9 percent recorded in 2008.
The $2.6 billion loan was granted to Sri Lanka to avert a balance of payment crisis following the global economic crisis on condition that it get its spending under control.
So far, the IMF has released around $650 million to the government based on the fiscal performance of the Indian Ocean island following the end of its long 25-year civil war last May.
The IMF has set an even tougher target for Sri Lanka's budget deficit this year at 6 percent of GDP.
Central bank chief Ajith Nivard Cabraal told Reuters on Tuesday that it would be challenging to meet that level due to high government spending required for post-war reconstruction.
Sri Lanka's newly re-elected president vowed earlier this month to regain the progress lost in the quarter-century war with Tamil Tigers separatists by boosting the country's economy and unifying its people.
Mahidna Rajapaksa was re-elected by a landslide on Jan 26.
Sri Lanka will hold legislative polls on April 8 and the president has postponed the presentation of the budget until those elections are over. (Reporting by Shihar Aneez; Writting by Ranga Sirilal)
Courtesy: Reuters
5 Comments
Central bank chief Ajith Nivard Cabraal told Reuters on Tuesday that it would be challenging to meet that level due to high government spending required for post-war reconstruction.
Or is it on fraudulent elections and dansala politics????
Rajapacksa will pull another fast one he know how to handle the rest of the world. Start with India give them a dangling carrot, they will do the legwork.
They, the SL govt will do its utmost to hoodwink the WB officials to get hold of these typrs of funds.
They are the leaders of hoodwink and should be brought to heel.
Come on WB, be strong and prudent. a j.
There was much speculation CBSL Governor Cabral would have agreed to anything to see the tranches coming in when the difficult negotiations were on. The IMF knew the assurances may fail - and looks like that is what is happening. ``Challenging`` the IMF is unusual. Greece has already got caught with their pants down -
for cooking up figures.
ISS
“The economy is poised for a recovery this year. External balances are strong, remittance inflows continue at a high rate, tourism prospects are rapidly improving, and gross reserves remain at comfortable levels” says an IMF mission led by Dr Brian Aitken."
This is an A rating from the IMF, Greece an EU Nation would not have a report card like this.I am not sure where ISS gets his stats when commenting extensively on the plight of his motherland.
There is nothing wrong with the IMF setting guidelines with respect to local or international borrowings.These conditions are aimed to adjust or restruture the economies to ensure the IMF loans are not squandered.
Srilanka has done extremely well under the burden of massive expenditure on arms ,ammunition and manpower fighting the war.
The last 4 years in particular are exemplary with regards to the economic growth with the per capita income doubling from US $ 1000 to US $2200.
Having eradicated the scourge of terrorism the country has a peaceful environment.All parts of the country specially the areas rich in natural resources amazing scenery and land scape are available for development.Businesses specially foreign companies are enthusiastic to tap these resources.The money allocated to fighting the war is now are being utilized for rapid infrastructure development.
We now have the leadership which is determined to propel the country forward to prosperity and security for at least next seven years.
The thinking people who care about the country and the welfare and prosperity of its people should consider these facts when they select members to represent them in this exciting new era.