Many positive economic benefits from the IMF loan

Former Finance Minister, Ravi Karunanayake says that despite the current economic and political crisis in the country, the extended loan amount of 2.9 billion dollars from the International Monetary Fund will be used to increase the foreign reserves in order to complete the structural reform programs as well as the external debt payments.

Ravi Karunanayake who points out that he took the initiative to effectively handle a $1.5 billion loan, received from the International Monetary Fund in 2019 in order to increase foreign reserves and avoid a balance of payments problem also explained that this will greatly help in generating additional international financial support in three ways.

He also explained that a program established with the International Monetary Fund will fulfill a special requirement of obtaining loans from the World Bank, the Asian Development Bank and other multilateral sectors.

Secondly, Ravi Karunanayake while pointing out that a group of countries organized and supported by the International Monetary Fund will come forward to support the country in a program for stability further stressed that either a large part of the loan granted by the IMF can be a long term facility under a law interest or a one time facility.

Thirdly, the Former Finance Minister also said that it will be possible to obtain funds from the private capital market at competitive interest rates by using the credibility of the economic reforms that will be built by entering into a program with the International Monetary Fund.

Ravi Karunanayake who points out that a special benefit that will be received after the opening of IMF loan to Sri Lanka will be the opportunity for the government to implement a series of subtle policy changes also emphasized the avenue for activities for competency building with instructions while drawing concessional financial assistance at a competitive rates prevailing in the open market from the International Monetary Fund.

Ravi Karunanayake, former Minister of Finance, also highlighted that in order to cover debt stability and financial gaps, Sri Lanka's debt repayment will require concessions from creditors and additional financial facilities from multilateral partners.

The financial guarantees required to establish credit stability have been provided to the International Monetary Fund by Sri Lanka's official lenders, and it will be crucial to make a good will effort to reach a cooperative agreement with private lenders before the extended credit facility is granted to the country.

Ravi Karunanayake, while emphasizing that the government should implement these policy changes as soon as possible in order to build a highly competitive and export-based economy, also claimed that the majority of the population should be prevented from facing economic difficulties.

Pointing out that the government has given 15 promises to the International Monetary Fund, also says that the opportunity has come for the top officials of the Ministry of Finance and the Central Bank to introduce major tax reforms to increase the revenue of the government at the expense of financial strength.

Minimizing the financial risk associated with the state institutions and the implementation of cost recovery based pricing for fuel and electricity to reduce the financial risk caused by public sector entities and for the recovery of such entities are among the promises given to the IMF.

Ravi Karunanayake pointed out that it has also been proposed to increase the social welfare expenditure and expand and improve the coverage limits of the social safety net to provide support for the poor and vulnerable.

He explained that implementation of   data-driven monetary policy, fiscal consolidation, fiscal deployment under few stages, establishing price stability,  strong autonomy of the Central Bank,  a mechanism of flexible foreign exchange as well as flexible inflation target to establish foreign reserves are also among the promises thus made by the government to the International Monetary Fund.  

The former Minister of Finance, who claims that enhancing the safety net of the financial sector, ensuring a good and sufficiently profitable banking system as well as regulatory standards should be assured also stated that the government has accepted to establish financial transparency, public financial management and laws and policies to reduce conditions that allow for law level of corruption

He while pointing out that the commercialization of government institutions whose performance has declined due to corruption, mismanagement and technical failures must be done further emphasized that the reform process of those institutions should be accelerated without allowing those institutions to become a burden to the country.