IMF APPROVES US$567 MILLION FOR SRI LANKA

Commends Progress in Peace Negotiations

Funds to Support Government’s Economic Program Based On “Regaining Sri Lanka”

The International Monetary Fund’s (IMF) Executive Board approved today, a US$567 million credit equivalent to one hundred percent of quota for Sri Lanka, to support the government’s economic program for 2003-2006. Effective immediately, the Sri Lankan government will receive US$81 million. The IMF also commended the significant progress of the government’s peace negotiations and emphasized the need for donor financing to support economic initiatives to strengthen the peace process.

This IMF decision was the first contribution to the country right after the seminar hosted by the U.S. Deputy Secretary of State Richard Armitage at the Department of State, ahead of the Tokyo Conference on Reconstruction and Development of Sri Lanka scheduled for June 9 and 10, 2003. At this seminar, the IMF and other donors supported the peace process and expressed strong support for providing Sri Lanka with increased international financial assistance.

Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman of the Executive Board of the IMF said: “Sri Lanka today stands at a pivotal point in its history. Over the past 20 years, a long civil conflict has beleaguered the country, which not only disrupted economic activity, but also hampered the sustained implementation of economic reforms. The current environment, in which peace negotiations are progressing well and economic activity is picking up, provides an excellent opportunity for Sri Lanka to implement deeper economic reforms and put the economy on a path of sustained high growth.”

Sri Lankan Ambassador to the U.S., Devinda Subasinghe welcomed the decision and said: “The decision of the IMF today, the largest ever IMF commitment to Sri Lanka, is a testimony of actual support the international community is giving to Sri Lanka as the government pursues the path of peace and economic growth. This credit, the first commitment of financial support following the U.S. government hosted seminar earlier this week, reinforces the international statements of support for the gains we have achieved by providing the economic foundations for peace.”

The credit arrangement, under the IMF’s Poverty Reduction and Growth Facility (PRGF) seeks to increase economic growth and reduce poverty by supporting the government’s economic program based on “Regaining Sri Lanka”.

Sugisaki also praised the government’s efforts towards economic reconstruction and decreasing poverty and pointed out: “The government’s attention to reducing conflict-related and rural poverty is well placed. The implementation of plans to strengthen rural infrastructure and improve access of the poor to quality education and health services are appropriate and necessary steps.”

Sugisaki also noted as well the government’s economic reforms: “To fully realize the program’s medium-term objectives for growth and poverty reduction, lasting peace is necessary. The authorities are fully committed to the program and have embarked on difficult reforms, while making strong efforts to preserve public support for the peace process.” He also emphasized the need for donor financing and said: “…continued donor financing is required to support reforms and reconstruction, as well as the momentum of the peace process”.

Embassy of Sri Lanka
Washington DC
USA

18 April 2003