Reuters Interview - IMF Loan - 5th May 2010
Reuters Interview - IMF urges Sri Lanka reforms to get loan moving again
Wed May 5, 2010 2:23pm IST By Shihar Aneez
COLOMBO (Reuters) - The International Monetary Fund urged the Sri Lankan government on Wednesday to speed up fiscal reforms and produce a more comprehensive deficit cutting plan if wants to get a multi-billion dollar loan back on track.
"The disbursement of the next tranche (of the loan) is linked most importantly with the budget," Koshy Mathai, the IMF resident representative for Sri Lanka, told Reuters in an interview.
"What we looking for is the budget and meaningful steps towards reducing the deficit, and also doing it in an economically sensible way, raising revenue in a sustainable way, introducing sensible tax reforms and cutting inefficient expenditures."
Mathai said the IMF was not demanding immediate results today or tomorrow but wanted to see a firm plan over the medium term.
The IMF in February delayed the release of a third tranche of the $2.6 billion loan after the government overshot its 2009 budget deficit target. The shortfall rose to an eight-year high of 9.7 percent, according to the finance ministry, well above the original target of 7 percent.
The IMF had said it would disburse the next tranche if Sri Lanka lays out concrete plans for fiscal consolidation in its budget after the April elections. The loan was approved last July to help Colombo avert a balance of payments crisis.
But the government said last week it would only introduce fiscal reforms including tax changes in its 2011 budget, not this year's as it had previously pledged.
Economists and analysts say the IMF loan is important in maintaining investor confidence in the $40 billion economy as the country works to recover from a 25-year civil war. Full Article...