Sri Lanka’s central bank ready to adopt IMF program

Colombo: The Central Bank of Sri Lanka (CBSL) said on Friday that it was ready to adopt the International Monetary Fund (IMF) program within March 2023 itself.

CBSL Governor Nandalal Weerasinghe told a press conference that the CBSL and the IMF have been engaging continuously in intensive negotiations on the monetary policy stance amid extraordinarily high inflation and a high degree of uncertainty surrounding inflation projections and the near term outlook.

There have been some differences between the CBSL and IMF staff on the inflation outlook, Weerasinghe said.

He also said that the Monetary Board of the CBSL decided to raise the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 100 basis points to 15.50 percent and 16.50 percent respectively.

Given the necessity of fulfilling all the prior actions in order to move forward with the finalization of the IMF Extended Fund Facility (EFF) arrangement, the Monetary Board and IMF staff reached a consensus to raise policy interest rates, which was envisaged during the initial stage of negotiations.

He said this decision demonstrates Sri Lanka’s commitment to the IMF arrangement, which has been pursued by the government in order to ensure stability in the economy on multiple fronts.

Sri Lanka, facing its worst economic crisis since independence, suspended repayment of external debt in April 2022 and started negotiations with the IMF for a 2.9 billion U.S. dollar EFF arrangement.

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