'Radio Silence' - Governor says cannot reveal IMF content in advance

COLOMBO (News 1st); The Governor of the Central Bank of Sri Lanka Dr. Nandalal Weerasinghe told News 1st that after an IMF Staff Level Agreement is reached 'Radio Silence' is observed, adding that Sri Lanka does not have a practice of revealing such programs to parliament ahead of finalizing it.

"As authorities, we should not reveal the debt restructuring parameters," he said noting that it is a very market-sensitive process.

The Governor said Sri Lanka had 16 IMF programs in the past, and during that time when the government reaches a Staff-Level Agreement with the IMF, the contents have not been disclosed in advance.

The Minister of Finance and the Central Bank Governor sign a document called the Memorandum of Understanding on Economic Policies on the basis of conditions and all the policies that we are going to implement over the years, he added.

Governments in the past have never tabled this document in the Parliament, and it had not even been submitted to the Cabinet, he pointed out.

"For the purpose of transparent policies, it would be good to share as much as possible with the Public and the Parliament. What we need to understand is that there are certain policies and measures that are very market sensitive. Those cannot be revealed in advance to the public," he stressed.

Speaking on the Face The Nation program by News 1st on Monday (5) night revealed that when he took over as the Governor of the Central Bank, Sri Lanka had only US $ 20 Million as liquid reserves to finance imports.

"However, we had a US $ 1.5 Bn Chinese Swap, which was not usable. Some reserves are not in liquid form," he disclosed.

The Central Bank Gover said that over time the reserves built, however, those reserves are being used for the imports of essential items.

"The point I am trying to make is this. We have this relatively low level of reserves and we have to pay US $ 27 Bn over the next four to five years. This is where the government had to announce that we are not a position to pay, give us some time to restructure our debt obligations and on that basis, we are seeking relief from our external creditors," he said adding Sri Lanka cannot pay the US $ 27 Bn over the next five years, and Sri Lanka is requesting to make the payment over a period of time after restructuring the debt. 

The Central Bank Governor stressed that in addition to the debt burden, Sri Lanka also has a trade deficit of around the US $ 1 Bn.

The Governor of the Central Bank of Sri Lanka Dr. Nandalal Weerasinghe told News 1st that US $ 2.9 Bn agreed to with the International Monetary Fund at Staff Level is not sufficient for Sri Lanka.

"What we expect is that with the IMF agreement, the World Bank and the Asian Development Bank and other multilateral agencies will enhance their help to Sri Lanka and will offer more money," he said.

The Governor said that the additional US $ 4 to 5 Bn can be obtained from other sources and if Sri Lanka gets relief from creditors to make payments later, the country would not need to rush to boost reserves.

"That is why going forward, I am confident we can manage the situation with the IMF money, and the money we expect from the World Bank and the ADB, and the adjustment in the trading account," he added.