IMF’s USD 800m, a grant not a loan | Page 2 | Sunday Observer
SDR program confusion

IMF’s USD 800m, a grant not a loan

18 July, 2021

Sri Lanka will receive a certain amount of money from the International Monetary Fund (IMF) under the Special Drawing Rights offered to member countries but has not agreed to a foreign reserves support program from the IMF, said Central Bank Governor Prof. W.D. Lakshman last week.

He said Sri Lanka’s stance remains with regard to seeking funding from the international donor.

“We have not sought a program from the IMF.  It is a misunderstanding that we need to apply for the allocation to member states under the SDR. The Fund provides a grant to member countries under SDR to finance economic growth,” the Governor said.

The government reiterated its policy of non-debt creating inflows that supports economic growth rather than stifles development.

As of end June the gross official reserves stood at US dollars 4.0 billion (equivalent to 2.7 months of imports) which does not include the bilateral currency swap facility with the People’s Bank of China (PBoC) of CNY 10 billion (equivalent to approximately US dollars 1.5 billion). 

The IMF will provide US $ 800 million (Rs. 160 billion) in August to boost the country’s economic strength according to Minister of State for Money and Capital Markets and State Enterprise Reforms, Ajith Nivard Cabraal. Cabraal made it clear that it would be  a grant and not a loan to be repaid.

In view of the global coronavirus epidemic situation, the IMF decided to provide US $ 650 billion to its member countries. Cabraal said that the above amount would be given to Sri Lanka under that program. The State Minister of Finance said the Fund had made similar grants to its member countries during the global economic downturn, during which time Sri Lanka received US $ 510 million under the program. Cabraal said that the money will be used to develop the country’s economic strength.