Sri Lanka’s foreign reserves had in recent times seen a drastic drop resulting in the bank allowing the Sri Lankan Rupee to depreciate as against the U.S dollar to record low levels.
However the Central Bank said in a statement early Tuesday that with the IMF approving the loan the disbursement as well as other inflows on account of workers’ remittances, inflows to the government to finance various infrastructure development projects and inflows to the private sector have helped raise the country’s foreign reserves to a comfortable level.
The Executive Board of the IMF met in Washington on Monday and completed the seventh review of Sri Lanka’s economic performance under a program supported by a Stand-By Arrangement (SBA).
The completion of the review enables the immediate disbursement of about US$ 426.8 million, bringing total disbursements under the arrangement to an amount equivalent to about US$ 2.13 billion, the IMF said in a statement.
The Central Bank said that its gross official reserves now stand at US dollars 6.1 billion, which is equivalent to 3.6 months of imports.
With the receipt of the eighth tranche from the IMF, the total outstanding value will exceed 300% of Sri Lanka’s current quota, thus requiring the payment of an interest surcharge of 2.0% on top of the current interest rate for the portion exceeding the 300% of the quota.
Despite the relatively higher interest rate, Sri Lanka considered opting for the IMF tranche favourably in view of the current uncertain global environment, the Central Bank said.