The Colombo-based IMF Resident Representative for Sri Lanka and the Maldives Koshy Mathai says the impact of devastating floods would be certainly one of the key issues to be discussed between a visiting IMF delegation and the Sri Lankan government shortly.
Mathai was responding to a query by The Island on ways and means of mitigating the impact of floods on the Sri Lankan economy and how the IMF proposed to do so.
Mathai said that an IMF team led by Dr. Brian Aitken was here for its regular quarterly review of the Sri Lankan economy and the flood situation would be definitely discussed.
The IMF delegation, which arrived in Colombo last week, is expected to be here during the week. Mathai didn t elaborate on the ongoing discussions.
Government ministers have estimated the losses due to torrential rains and floods at over Rs.50 billion, prompting UNP National List MP Dr. Harsha de Silva to demand that the government take tangible measures to cut down on waste, corruption and irregularities in the public sector to help the disaster victims.
The visit by the IMF takes places following the release of the fifth tranche of about $ 217 million to Sri Lanka thereby bringing total disbursements under the IMF programme to $ 1.5 billion since the middle of 2009.
In keeping with the $ 2.6 billion IMF stand-by loan facility, Sri Lanka will receive $ 1.1 billion spread across five tranches scheduled over the rest of 2011 and into the beginning of 2012.
Opposition sources said that the losses due to recent floods coupled with a bigger oil bill and massive payments (as much as Rs. 10.3 billion) to Citibank over oil hedging deals together with interest could have a destabilizing impact on the economy. Sources said that the government should review the economy and its approach to future challenges taking into consideration current economic difficulties.
Two other banks Deutsche Bank and Standard Chartered Bank have also sought arbitration in London over amounts due to them. While Deutsche Bank claimed US$ 64 million (Rs. 7 billion), the SCB asked for US$ 103 million (Rs. 11.3 billion).