SL has signed IMF Letter of Intent, Ranil informs Parliament

COLOMBO – Sri Lanka has signed a Letter of Intent covering the deal with the International Monetary Fund (IMF) to be submitted to its Executive Board for approval, President Ranil Wickremesinghe told Parliament on Tuesday (7).

Sri Lanka got a second letter from China on Monday (6) and the same night the Letter of Intent was signed and sent to the IMF for approval, he said.

“We expect Board approval in the third or fourth week of March,” President Wickremesinghe said.

The approval of the IMF deal will also allow the World Bank and Asian Development Bank to give loans, he added.

Sri Lanka has hiked rates to reduce inflation and slow credit and end the forex crisis, triggered by liquidity injections made to keep too low rates.

Several countries including Ghana, Zambia and Surinam with soft-pegged central banks followed similar policies – despite having higher tax to GDP ratios – have defaulted.

In recent years many central banks in the third world has been encouraged to follow aggressive open market operations under ‘monetary policy modernization’ leading to serial currency crises, exploding debt and low growth.


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