“standby agreement” with IMF


Global developments may have an impact on economy, says PM

Cautioning the people of Sri Lanka of an “unpredictable world scenario, politically and economically” in the near future, Prime Minister Ranil Wickremesinghe on Wednesday said his government might have to approach the International Monetary Fund (IMF) for a “standby agreement”.

The IMF stand-by arrangement is an economic program of Fund involving financial aid to a member state in need of financial assistance.

The Prime Minister said the ongoing war against the Islamic State in Syria and the inclusion of the Chinese currency in the IMF’s reserve currency basket “are going to impact us and the rest of the world economically”.

The projection for the world’s economic growth rate had been lowered from 3.3 per cent to 3.1 per cent.

While established markets in the world would see improvement in their position, emerging markets would witness “slower growth with increased risks” and reduced flow of funds.

“There will be pressure on our currency. There will be increased financial market volatility as far as we are concerned,” he said, while speaking at an event marking the 30th anniversary of the Colombo Stock Exchange here.

Pointing out that the availability of Chinese credit had come to an end, Mr. Wickremesinghe expected the U.S. to hike interest rates shortly as American President Barrack Obama wanted to show to his electorate that “under his administration, the economy has improved and interest rates are gradually crawling back to normality”.

To overcome various challenges, the Prime Minister said the country would have to ensure that it grew at a rate of 6.5 per cent initially and eight or nine per cent subsequently.

“This is a difficult task but not impossible,” he observed.

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