Sri Lanka cabinet divided on IMF, more discussions on Jan 03: Minister | Sinhala News

ECONOMYNEXT – Sri Lanka’s cabinet of ministers will decide whether or not to go for an International Monetary Fund bailout on January 03, with senior officials also present, a minister said.

At a cabinet meeting on January 03, senior central bank and treasury officials will be present to provide information to the cabinet, Labour Minister Nimal Siripala de Silva told reporters.

“They will tell whether we are going to the IMF, whether are not going and if not what are there reasons,” Minister de Silva said.

“At the next cabinet meeting there will be a collective decision on what to do. The Finance Minister will also have to give his views as the person in charge of finances.

“There is no hardline against going to the IMF. Some are saying to go, others are saying not to go.”

He said how other countries are helping to manage the situation will also be discussed.

Sri Lanka’s cabinet had discussed the matter for at least three weeks without taking any firm decision.

Sri Lanka is facing foreign exchange shortages due to liquidity injections made to maintain a 6.0 percent policy rate amid a budget deficit close to 9 percent of gross domestic product.

About 1.5 trillion rupees were printed over the past two years to keep rates down, through a combination of direct purchases of Treasury securities, crippling bond and bill auctions through price controls and overnight injections.

In the past two months, bond markets have started to operate, but forex markets are hamstrung by the lost credibility of a peg at 200 to the US dollar. (Colombo/Dec27/2021)

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