IMF to assess economic damage in Sri Lanka after Cyclone Ditwah
Washington: The International Monetary Fund (IMF) said a fact-finding mission will visit Sri Lanka from January 22 to 28 to assess damage from Cyclone Ditwah and discuss the implications for the country’s ongoing Extended Fund Facility (EFF) programme.
“A fact-finding mission will visit Sri Lanka from January 22nd to 28th,” Julie Kozack, Director of the IMF’s Communications Department, said at an IMF press briefing.
“The mission, the goal of the mission is to firm up our understanding of the size and the scope of the damage caused by the cyclone,” she said.
Kozack said the IMF team will “discuss with the authorities their policy intentions and implications of the impact of the cyclone for the EFF program.”
She emphasised the limited mandate of the trip.
“But I would like to underscore that this is a fact-finding mission to enable our team to get a better understanding of the situation on the ground and how we can best support Sri Lanka as it moves forward,” she said.
Kozack said that on December 19, the IMF Executive Board approved emergency financing for Sri Lanka under the Rapid Financing Instrument.
“This provided Sri Lanka with immediate access of about U.S. $206 million,” Kozack said, adding: “And the RFI is really aimed at helping Sri Lanka address the urgent needs arising from the catastrophic Cyclone Ditwah as the country aims to preserve macroeconomic stability.”
Asked whether the cyclone could change programme objectives, including electricity pricing, Kozack said: “There is a commitment under the program to maintain cost recovery in the utility sector.”
She explained why the Fund views that objective as important.
“That’s really important to help ensure fiscal sustainability in Sri Lanka because that would help the utility company to not run financial losses,” she said.
Kozack said specifics would be taken up by the visiting team.
“What exactly may be needed to support Sri Lanka going forward is something that our fact-finding team will certainly be discussing with the authorities,” she said.
She added: “Our goal is to help Sri Lanka as it recovers from the, you know, catastrophic hurricane and to provide our support in whatever way, in line with our own mandate around helping Sri Lanka maintain macroeconomic stability.”
Sri Lanka has been working through an IMF-supported reform programme following a severe balance-of-payments and debt crisis that pushed the country into default earlier in the decade. Natural disasters can complicate recovery by widening fiscal pressures and increasing immediate spending needs.