SL achieves three vital benchmarks enabling inflow of IMF assistance

Sri Lanka has by March 31 met the three vital benchmarks agreed with by the International Monetary Fund to qualify for further assistance and two tranches totaling about USD 650 million from the multilateral concessional lender is likely to be a available to the country in the short term, Central Bank Governor Ajith Nivard Cabraal said yesterday.

The targets that had been set – and achieved – related to the country’s net international reserves, reserve money and net deficit financing (NDF) relating to government borrowing for purposes of the budget.

Analysts pointed out that control of NDF, by pre-empting government borrowing, made more money available to the private sector.

Cabraal explained that the reference to ``net international reserves’’ excluded borrowings – reserves that have built up due to loans that had been obtained.

Asked about the rising budget deficit, an area where Sri Lanka’s performance has been dismal over a long period of time, Cabraal said that ``we are on track of reaching the budget deficit target this year.’’

There was no word yet on when the IMF funds will become available. However, analysts said that given that the country has achieved the targets agreed with the IMF, the fund’s staff will not have to go back to the board to make the disbursements.

Data available for up to the first quarter of this year suggests 6% GDP growth with a favourable monetary outlook down the road.

The Central Bank’s Annual Report for 2009 will be presented to President Mahinda Rajapaksa (in his capacity of Finance Minister) by the Monetary Board on Monday. The presentation of this document to the minister in the first week of April is a statutory obligation of the bank.

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