IMF On Sri Lanka Deficit, No Reference to Defense, No Timeline for Egypt Deal

At the International Monetary Fund’s briefing on April 5, Inner City Press asked about Egypt and Sri Lanka. The Egyptian answer was short and picked up by wire services — "the timeline for concluding an agreement is not fixed and will depend on how quickly progress is made by all sides on these issues" — but the Sri Lanka answer was provided later and so is published here.

  Inner City Press asked, "What is the status of the IMF’s program in Sri Lanka? Is the IMF only looking at balance of payments? When would it consider releasing the next and final tranche?"

  Later, just after embargo deadline, the following came in:

From: IMF Media Relations
Date: Thu, Apr 5, 2012 at 10:37 AM
Subject: Question Received
To: Matthew Russell Lee [at]

Dear Matthew, Thank you for your question. Please attribute the following to Gerry Rice, Director of External Relations Department, IMF.

On April 2, the Executive Board approved the completion of the Seventh Review of the Stand By Arrangement, which enables the disbursement of SDR 275.6 million (approximately $400 million). The Board also approved the extension of the program by 2 months to July 2012 to allow time for the completion of the Eighth and final review.

The main pillars of the program are to rebuild Sri Lanka’s reserves, while transitioning to a more flexible monetary and exchange rate policy framework, reducing the budget deficit to sustainable levels, and strengthening the financial system.

  This follows back and forth with the IMF regarding Sri Lanka’s increased defense spending.

  The question of if the IMF is only looking at balance of payments refers, for example, to the recent UN Human Rights Council resolution on Sri Lanka and accountability for crimes in the final stages of its military conflict in May 2009 — after which defense spending continued nevertheless to climb, impacting the very budget deficit the IMF refers to.

  Meanwhile the military SCAF government in Egypt is reportedly poised to take out an IMF loan. Inner City Press asked, What is the IMF’s reaction to the reported deal in Egypt around an IMF program? Will the program now go forward? Does the IMF think enough ‘stakeholders’ agree?"

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