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Thursday, June 8, 2023

Finance Ministry starts building framework after WB message – The Morning

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  • World Bank last week put brakes on loans without framework
  • Macroeconomic policy framework in the making, Treasury confirms 

The Ministry of Finance is in the process of preparing a macroeconomic policy framework as suggested last week by the World Bank, without which the World Bank said it would pause the issuance of loans, The Sunday Morning Business learns. 

Treasury Deputy Secretary R.M.P. Rathnayake told The Sunday Morning Business that the Ministry was in the process of preparing a policy framework which could be referred to as a fiscal policy framework. 

“We are currently discussing this. Prime Minister Ranil Wickremesinghe recently stated that he wanted to present a new interim Budget within the next few weeks and it is likely to be based on this policy framework,” he stated. 

Speaking further, Rathnayake noted that this policy framework would not be a new one but the same framework submitted to Parliament under Budget 2022. However, he added that they were revisiting the outdated facts and figures of the said framework as some of the content was no longer “realistic” and had “deviated from the original estimates”.

“We are basically reviewing and updating,” he stated. 

According to him, the World Bank will still continue to extend its support to Sri Lanka, but new loans will not be issued till the country submits a policy framework. 

He added that once Sri Lanka submitted its reviewed and updated policy framework to the World Bank, it could submit it to its Board and seek approval for further lending. 

The World Bank on Tuesday (24) said it was not planning to provide any new financing to cash-strapped Sri Lanka until an adequate economic policy framework was put in place.

In a statement, the multilateral development bank said it was repurposing resources from previously-approved projects to help the Sri Lankan Government pay for some essential medicines, temporary cash transfers for poor and vulnerable households, and other support.

“We are concerned for the people of Sri Lanka and are working in coordination with the IMF and other development partners in advising on appropriate policies to restore economic stability and broad-based growth. Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka,” it asserted.

The World Bank in April agreed to provide Sri Lanka with $ 600 million in financial assistance to help meet payment requirements for essential imports. 

– By Tanya Shan 

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