Feb 10, Colombo: An International Monetary Fund (IMF) delegation is currently in Sri Lanka to hold discussions with the government on a fresh US$ 1.5 billion budgetary support facility the government expects to obtain from the global lender.
The IMF delegation, headed by John Nelms and including IMF's resident representative in Colombo Koshy Mathai has also met with members of Sri Lanka's main opposition United National Party (UNP).
During the meeting with IMF delegation, opposition parliamentarians Ravi Karunanayaka, Kabir Hashim and Dr. Harsha de Silva had expressed concerns over the government's economic policies to the visiting delegation.
The opposition MPs had explained that in the event the IMF agrees to grant the US$ 1.5 billion budgetary support facility requested by the government, the Fund would be accused of aiding and abetting the Rajapaksa government's mismanagement of finances.
The IMF delegates had viewed with concern the opposition representatives' explanation that the Rajapaksa government's corruption and inefficiencies were dragging down the country.
The IMF delegation had also agreed that the government had in fact failed to fulfill some of the conditions laid down when the Fund granted the US$ 2.6 billion Stand By Arrangement (SBA).
When the Fund approved the final tranche of the in July last year, the IMF agreed that Sri Lanka's current monetary policy stance is appropriate, while observing that the slowdown in economic activity and declining imports are adversely affecting fiscal revenues and interest payments on government debt are higher than budgeted.
The lender noted that although the authorities are committed to meeting their 2012 deficit target by restraining expenditure, an intensified effort to strengthen revenue administration is needed.
Although Sri Lanka has seen a remarkable progress in the country's economy after the government wiped out the separatist Tamil Tiger rebel group, LTTE, in May 2009, the economic growth has started moderating in response to policy tightening and weakening global demand.
The IMF pointed out the need for the Sri Lankan government to continue structural reforms to put state-owned energy enterprises on a sound financial footing.
The delegation will return to Washington DC this week and report to the Board of Executives of their feedback on whether the government should be given the requested funds.