China has approved a 10 billion yuan ($1.54 billion) currency swap with Sri Lanka.
State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal had said that the deal will allow the island to weather present difficulties.
Gerry Rice of the Communications Department at the IMF told reporters that the IMF is closely monitoring economic policy financial developments in Sri Lanka including the recent agreement on a swap line with the People’s Bank of China.
He recalled that the extended fund program with the IMF approved in 2016 expired last year, June 2020.
“We did receive a request from the Sri Lankan authorities for emergency financial support to help fight the COVID pandemic,” he said.
Rice said that the assessment of that support has taken longer than for other countries due to Sri Lanka’s daunting economic challenges and high public debt.
“So we have sought, but not reached understanding, on how to fulfill the key requirements for what could be a rapid financing instrument which would include policies to continue ensuring debt sustainability to address the balance of payment challenges including from the COVID‑19 impact on tourism and to preserve international reserves,” he said.
He also noted that Sri Lanka has relied on important restrictions since last year and recently introduced additional measures such as a requirement to convert 25 percent of export proceeds. (Colombo Gazette)