Sri Lanka cabinet discussed going for IMF bailout at length: spokesman

ECONOMYNEXT – Sri Lanka’s cabinet of ministers has discussed seeking an International Monetary Fund (IMF) bailout at the latest cabinet meeting, a spokesman said, amid rising difficulties in importing cooking gas and some foods,  even as the country’s refinery was shut to save forex.

“There was an in depth discussion on the pros and cons of going to the IMF, but no decision was taken,” co-cabinet spokesman and Energy Minister Udaya Gammanpila told the weekly cabinet news briefing on Tuesday (16).

Sri Lanka is facing forex shortages after record money printing in 2020 and 2021 deplete forex reserves, and undermined the credibility of a soft-peg with the US dollar.

The government has presented a budget with higher taxes for 2022 but interest rates are still relatively low and liquidity injections are made to sterilise interventions.

State-run Ceylon Petroleum Corporation (CPC) shut its refinery on Monday (15) saying its relatively high share of furnace oil was not needed for power generation due to rains and available forex was better used to import fuels that are immediately needed.

Sri Lanka has been having forex troubles for 70 years since a money printing central bank was set up in 1950 but no meaningful reforms have been made to curb the monetary board to print money and keep rates down de-stabilizing a peg. (Colombo/Nov16/2021)

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