Sri Lankan officials have finally admitted that they will seek assistance from the International Monetary Fund (IMF) this week with reports claiming that Colombo will also look to the Word Bank as the island braces for further economic hardship in the months ahead.
Sri Lanka’s Central Bank Governor Ajith Nivaar Cabraal however told an all-party conference in Colombo yesterday that though they were going to the IMF, his government remains wary.
“The opposition and various experts have expressed the belief that connecting with the IMF will boost investor confidence and encourage non-loan inflows,” he said. “The IMF has also stressed the urgency of implementing a credible and coherent strategy to restore macroeconomic stability and debt sustainability.”
“We must also remember that when dealing with the IMF over various economic matters, their policies might be strict,” added Cabraal.
Cabraal has previously strenuously denied all reports that Sri Lanka would go to the IMF for support. The governor has been under fire as the island’s economic crisis has worsened, with spiralling inflation and many plunging into poverty.
Next month Sri Lanka’s Finance Minister Basil Rajapaksa will fly to Washington DC to hold talks with the IMF.
Reuters reported earlier today that Rajapaksa will also meet officials from the World Bank, according to two sources “with direct knowledge of the plans”.
"If they have a credible IMF programme then there will be a period, perhaps six months to a year, maybe two, when it will be damn tough," one source said.
"So how will people survive? That is where institutions like the World Bank will come in with budget support."
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