Reserves reach USD 5 billion for first time
Second tranche of IMF loan on Monday

Sri Lanka will on Monday receive USD 329 million from the IMF – the second tranche under the IMF’s 20-month 2.6 billion dollars standby facility arranged in July, Central Bank Governor Ajit Nivard Cabraal said yesterday.

The IMF announced that its board had reviewed the Sri Lankan government’s progress on the implementation of reforms agreed to last July and the decision to release the second tranche was authorized.

"The receipt of these funds will take our reserves above the USD 5 billion figure," Cabraal said noting that the country’s reserves had previously never exceeded USD 4 billion.

The IMF agreed to extend this facility last July to help overcome effects of the global financial crisis and support the economy following the end of the war.

The first tranche also amounted to USD 322 million.

"The financing from the IMF has helped avert a sharp economic slowdown that would have hurt all the people of Sri Lanka, particularly the most vulnerable, and compounded the suffering caused by the war," said Brian Aitken, Head of the IMF Mission to Sri Lanka.

The IMF said that in their most recent communications on the program, the Sri Lankan authorities have reiterated their commitment to rapidly address humanitarian issues saying the government recognized the need to move forward quickly to resettle those displaced by the conflict and begin the reconstruction effort.

"(The Government) is drawing all budget resources for the provision of humanitarian assistance and resettlement. Their goal is to resettle 70% to 80% of the people displaced by the conflict by the end of this year and complete the resettlement in the first part of 2010."

The IMF said that the program will guide the government as it takes the necessary steps to return to economic health in the months ahead.

"One of he main purposes of the program is to rebuild confidence in the economy, thereby lay the basis for higher growth in the years ahead," Aitken said. "This would provide more resources to the government to engage in their reconstruction efforts and sustain social spending to protect the poor."

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