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Message: <blockquote data-quote="lkdood" data-source="post: 12001217" data-attributes="member: 92282"><img src="http://t2.gstatic.com/images?q=tbn:ANd9GcTB8cQbtvo_k7NAfzMYT9tljaHdFDLWUP7kcumf1BhyUXif3aphRg" alt="" class="fr-fic fr-dii fr-draggable " style="" />The Government is planning to borrow US$1 billion in the international  markets besides attempting to borrow US$500 million via the Bank of  Ceylon. After the IMF had ended the US$ 2.6 billion bailout package  charged UNP National List MP Harsha de Silva today.Following is the text of the statement issued by him yesterday  explaining the current financial position the country is in today. “The verdict is out and for all practical purposes the IMF has abruptly  ended the US$ 2.6 billion bailout package to Sri Lanka with US$ 800  million yet to be released given the failure of the government to keep  to the agreed targets; particularly the net international reserve  target. The unsustainable policy stance of fixing the currency at a highly  overvalued and arbitrary level of LKR 114 to the USD by selling more  than a third of the external reserves, most of it borrowed, and  thereafter printing money to offset lost liquidity to maintain  artificially low interest rates have resulted in a massive trade deficit  and continued pressure on the LKR. The trade deficit of close to US$9 billion is unprecedented and unlike  in previous years it cannot be offset by remittances and tourism  earnings; a yawning gap of around 40 per cent remains. If as the  governor says Sri Lanka has more than sufficient reserves and thus there  is no need for additional borrowing this year then it is of no  consequence that the IMF has stopped the facility. But, as was the case  last week where the completely politicised Governor of the Central Bank  attempted to fool the public by falsely stating a higher than the true  rate of interest on the IMF loan this statement is nothing but pure  gobbledygook. The Government is already planning to borrow US$1 billion in the  international markets besides attempting to borrow US$ 500 million via  the Bank of Ceylon.  Given the history of our sovereign bond program and  the current global scenario Sri Lanka will not be able to borrow for  anything less than twice the rate offered by the IMF. Arrogance and incompetence of the regime will in the coming months begin  to bite as the adjustment on the exchange rate will have to be much  bigger and the impact on the public will become much larger. In the meantime, the export industry would also have felt a significant  blow with increasingly less resources being invested in the sector  relative to the GDP.  Ten years ago exports accounted for some 37per  cent of GDP, but today, it is at 17 per cent and dropping.”    DM</blockquote>

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