FACT CHECK : Are protests the reason behind Sri Lanka’s  inability to reach an agreement with the IMF?

Sri Lanka is currently facing an unprecedented economic crisis. Economists have indicated that support from the International Monetary Fund (IMF) is vital to recover from this crisis. With regard to this, there has been considerable discussion regarding the IMF, negotiations with the IMF etc., on social media as well as offline. Ongoing protests in the country were also a part of these conversations.

It is within this context that, at a press conference held on 25th of July, the Minister of Labor and Foreign Employment Mr. Manusha Nanayakkara stated that the IMF was supposed to reach a staff-level agreement with Sri Lanka during the first week of August, but this has been delayed due to unrest in the country. This claim made by Minister Manusha Nanayakkara is a false statement. 

Click here for the press conference.

The comments made by Minister Manusha Nanayakkara regarding the IMF staff-level agreement are mentioned below. 

“The International Monetary Fund staff-level agreement which was to come in August this year has been delayed because of the unrest caused by some protesters whose agitation later turned violent. ”

Mainstream media also reported news citing the statement given by the Minister, here.

Below are some screenshots of the posts that were published on Facebook in this regard. 

We made an inquiry to the IMF in this regard.

Peter Brewer, the Senior Mission Head assigned to Sri Lanka on behalf of the IMF, and Masahiro Nozaki, the Head of the IMF Mission in Sri Lanka, responded to our inquiry as follows.

“We are closely monitoring the ongoing developments in Sri Lanka. We are continuing technical discussions with our counterparts in the Ministry of Finance and Central Bank of Sri Lanka and are ready for policy discussions with the new administration towards reaching a staff-level agreement on the EFF arrangement.”

“Progress towards a staff level agreement can only be made in discussions with the authorities. As the Managing Director indicated, as soon as there is a government that we can continue our discussions with, we will do so. Our understanding is that this is now the case and we look forward to continuing our discussion.”

We also asked an economist in Colombo who has knowledge in this regard, who agreed to comment the following on the guarantee of anonymity: 

“It was not because of the protests that it wasn’t possible to reach an agreement with the IMF. The IMF has requested an adequate financial guarantee. Further, they have requested a plan for debt sustainability, an interim budget, debt restructuring, debt analysis and creditor agreements and approvals. It has not been possible to reach an agreement with the IMF because the Government has not fulfilled these matters sufficiently. It is not because of the protests. The IMF did not negotiate with the Sri Lankan Government when there was no active government, but that too was for a short time. Nevertheless, before and after that brief period, the IMF held continuous discussions with the Central Bank of Sri Lanka and the Treasury”. 

We made an inquiry to economist Dhananath Fernando, Chief Executive Officer of Advocata Institute.

“The IMF needs an assurance and an approval from the Government to implement the structural economic reforms needed to restore the economy. If the IMF suspects that the Government lacks the commitment or the capacity for reforms, it will take time to reach an agreement – or else, the relevant processes are delayed”. 

Although we made inquiries in this regard from the Ministry of Finance, the Treasury and the Central Bank of Sri Lanka, we did not receive a response from those parties (29th July).

Conclusion: Minister Manusha Nanayakkara’s statement that it was not possible to reach a staff-level agreement with the International Monetary Fund due to the protesters and riotous situation is false. 

The original Fact Check was published in Sinhala. Access here

For more Fact Checks by Hashtag Generation, here.

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