Crisis forced Sri Lanka to ensure financial discipline

The economic crisis forced Sri Lanka to ensure financial discipline and slash unwanted spending, Prime Minister Dinesh Gunawardena told Parliament today.

He said that the public and businesses are now being financially discipline and responsible.

The Prime Minister also assured transparency when taking forward the reforms as agreed upon between Sri Lanka and the International Monetary Fund (IMF).

Gunawardena told Parliament that Sri Lanka has been given breathing space as a result of the agreement reached with the IMF.

He said that Sri Lanka faced a serious crisis and Parliament must now support the recovery efforts.

The Prime Minister said that efforts must be taken to make the IMF agreement work.

Gunawardena also recalled that this was not the first time that Sri Lanka reached an agreement with the IMF.

The IMF Executive Board had this week approved a 48-month extended arrangement under the Extended Fund Facility (EFF) of SDR 2.286 billion (about US$3 billion) to support Sri Lanka’s economic policies and reforms.

“Sri Lanka has been facing a severe economic crisis as a result of past policy missteps and economic shocks. We have been deeply concerned about the impact of the crisis on the Sri Lankan people, particularly the poor and vulnerable groups, and about the economic costs of the delay in the country’s access to external financing,” the IMF said.

The Board approval marks an important step towards the resolution of the crisis.

Sri Lanka has now receives an initial disbursement of about US$330 million from the EFF arrangement, which is expected to catalyze new external financing including from the Asian Development Bank and the World Bank. (Colombo Gazette)