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“No fixed timeline” to disburse 2nd tranche of $3 bln loan, IMF official says
By SHIHAR ANEEZ
ECONOMYNEXT –Sri Lanka’s second tranche of a $3 billion loan from the International Monetary Fund is likely to be delayed as the country has failed to meet the program objective and a global lender’s official said there is no fixed timeline on the disbursement of second tranche.
Sri Lanka’s government revenue is likely to face a 15 percent fall from the target agreed with the IMF, the global lender said, due to poor tax administration and lower collection.
An IMF delegation was in Colombo over two weeks for the first review of the loan before the global lender’s Executive Board approval for the second tranche.
“There is no fixed timeline,” Peter Breuer, Senior Mission Chief for Sri Lanka at the IMF’s Asia and Pacific Department, told reporters at a media briefing on Wednesday after concluding the first review of the loan.
“We are confident that it (the GOSL) will be able to do so with a little bit more time,” he said referring to Sri Lanka’s effort to raise revenue.
The IMF in March this year approved a 48-month, $3 billion extended arrangement under the Extended Fund Facility (EFF) to support Sri Lanka’s economic policies and reforms with the main emphasis on increasing the government revenue, boosting the international reserves, and reducing inflation.
Soon after the approval, Sri Lanka which is going through an unprecedented economic crisis received the first tranche of $330 million. The first review was to assess the country’s performance against the IMF programme objective. Breuer said Sri Lanka is yet to satisfy two key objectives.
“We need two important things to be satisfied. We need to reach agreement on set targets, policies, and reforms that will allow us to go forward… with the understanding that the objective of the programme can be reached,” Breuer said.
“So, now we have discovered there was a little bit of shortfall on one area during this year. So, we are looking to try and find ways to address that shortfall and compensate.
He said working in a direction of having agreement on these policies is an “important prerequisite.”
“Then the other one is in the area of debt,” Breuer said adding that reaching agreement with creditors will help store debt sustainability in Sri Lanka.
“When these two conditions are met, we can go forward. Of course, there is a little bit of administrative process also. It will take some time to write the reports that actually assesses the performance of the first review before steps to be considered by our executive board which will make the final decision on this.
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AKD warns of far reaching economic consequences of Middle East war
President Anura Kumara Dissanayake yesterday called for an immediate and peaceful resolution of the escalating Middle East conflict, warning that the crisis could have far-reaching repercussions on the global economy, including Sri Lanka.
Addressing Parliament, the President stressed that no military conflict benefited humanity, particularly at a time when destructive military technologies were rapidly advancing.
“Any military conflict does not create a favourable situation for any group of people,” he said, urging all parties to make urgent commitments towards peace. “As Sri Lanka, our position is that all parties involved in this war must, as soon as possible, take steps toward a peaceful world.”
He cautioned that Sri Lanka could not remain insulated from the fallout from the conflict, noting that disruptions to global oil and gas supplies, threats to migrant workers in the Middle East, and potential shocks to tourism, remittances, shipping and aviation were real concerns.
A national programme was being formulated to mitigate the impact, he said, adding that its success would hinge on broader international efforts to restore stability, the President said.
Acknowledging public anxiety shaped by past economic hardships, President Dissanayake said social stability could not be ensured through rhetoric alone but required tangible guarantees that citizens would not face another crisis.
While noting that the government had successfully navigated multiple challenges since assuming office, he described the Middle East situation as distinct due to the uncertainty surrounding its duration and outcome.
The government, he said, was closely monitoring developments. The Central Bank had conducted a review with a report on the likely economic impact expected shortly. The Ministry of Finance is also preparing an assessment of the potential effects on public life, alongside measures to ensure the uninterrupted provision of essential services locally and for Sri Lankans overseas.
“The primary responsibility for finding a path out of the crisis rests with the Government,” he said, calling on Parliament and the public to collectively confront the challenge under a unified national plan.
Providing a detailed account of the country’s energy reserves, the President said storage capacity rather than supply remained the key constraint. Excluding the Indian Oil Corporation tanks in Trincomalee, total storage capacity at Kolonnawa and Muthurajawela stands at approximately 150,000 metric tons.
Diesel stocks were currently sufficient for 33 days, with refining contributing around 1,800 metric tons daily. Petrol reserves will last 27 days, with a 35,000 metric ton shipment due on March 7 or 8 expected to extend availability to around 40 days.
Aviation fuel stocks are adequate for 49 days, supported by both daily refining and imports. Scheduled shipments include vessels from RM Parks on March 14, Sinopec on March 17, IOC on March 21 and the Ceylon Petroleum Corporation on March 28.
Crude oil supplies were sufficient to operate the refinery for 26 days, with an additional shipment expected to extend operations by a further 18 days, the President said.
“Because of this, there is no crisis regarding oil,” the President assured Parliament.
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