The aim of the Committee on Public Finance (COPF), regardless of allegiances, will be to stand by the reforms promulgated by the IMF and being executed by the Central Bank, the committee’s chairman MP Harsha de Silva says.
His remark comes in the wake of a Central Bank confirmation that they are confident of having an actual IMF first tranche disbursement within the first quarter of 2023.
The COPF has queried the severe social implications of such steep mechanisms to adhere to IMF conditions.
In response, the Central Bank has confirmed that the IMF is wary about the social impact on vulnerable communities and has invoked certain safeguards such as expenditure ceilings to negate those effects.
When questioned about the adverse effects of market contraction due to the stifling interest rates, the Central Bank has acknowledged that those measures have been taken to limit growth in order to prevent the need for greater foreign exchange given the dwindling amount currently in the country.
The Central Bank went on to reiterate that with a cash infusion via the Extended Fund Facility (EFF) from IMF, interest rates can once again be relaxed, and the market will once again have an opportunity to expand.
When the question of alternatives to an IMF bailout were reached, the Central Bank has stressed that no other international financing/funding institute is willing to partner with Sri Lanka on its debt management unless they see an IMF partnership materialize first.
With the ostensible debt treatment measures that an IMF program accompanies, it reassures international agencies of Sri Lanka’s credibility to once more partner with the country for future ventures including debt management. The Central Bank has stressed that this is why it is imperative for Sri Lanka to lock in the bailout.
State Minister Suren Raghavan, MPs Anura Priyadarshana Yapa, Rauff Hakeem, Chandima Weerakkody, Harshana Rajakaruna, Vijitha Herath, Mayantha Dissanayake and Madhura Withanage were present at this committee meeting.