Press Release: Statement of the IMF First Deputy Managing Director Anne O. Krueger at the Conclusion of a Visit to Sri Lanka

January 19, 2005

Ms. Anne O. Krueger, First Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today at the conclusion of her visit to Sri Lanka.

"I wish that my first visit to Sri Lanka as First Deputy Managing Director of the International Monetary Fund could have taken place in happier circumstances. I came here to see at first hand the damage caused by the tsunami and to assess the problems that the Sri Lankan government and its citizens face in the aftermath of this terrible tragedy.

"We have all been horrified by the widespread destruction and loss of life that the tsunami caused in many Asian countries. It is hard to imagine the plight of those who survived the disaster but lost everything they had.

"Sri Lanka was among those countries proportionately worst affected. Thousands have died and many more have been made homeless — and a large proportion of those who lost their homes also lost their livelihoods. Perhaps as much as three quarters of the country's fishing fleet has been destroyed.

"So on behalf of the IMF's Board of Directors, the Managing Director and my management colleagues, and of the staff of the IMF, I first want to express our deep condolences to the people of Sri Lanka. Words cannot adequately express the feelings of those of us around the world who watched in horror as the true scale of the tragedy became clear. Even so we know that we cannot begin to fathom the magnitude of the catastrophe.

"It will take years to repair the damage. In my discussions today with President Chandrika Kumaratunga, Minister Sarath Amunugama, Governor Sunil Mendis and other senior ministers and officials, I emphasized that the Fund stands ready to do whatever is appropriate to help in the recovery effort.

"I have been hearing about the extensive relief efforts under way and about the scale of the challenges that the authorities face. What has been achieved so far is impressive and progress in the first phase of the recovery is well advanced. The courage and the determination of the Sri Lankan people and the government is laudable. As the authorities have emphasized, however, they are only at the beginning of what will be a long process.

"As I saw for myself when I visited Galle, it is too soon to gauge the full extent of the reconstruction needs: assessment of this is currently under way. We are keen to do whatever we can to help.

"The Fund's main role in the aftermath of disasters is to help countries maintain macroeconomic balance and financial stability, and that is important. To this end, we have already approved an extension in the repayment schedule of previous assistance provided to Sri Lanka: this will have the effect of reducing debt service payments by about $114 million this year.

"The Sri Lankan government has also requested emergency financial assistance; this can be made available quickly and without being linked to an IMF program. I expect this request to be considered very shortly by the Executive Board; and we would hope to be able to provide this assistance — which could amount to about $160 million — on concessional terms.

"The Fund is also willing to provide technical assistance to the Sri Lankan authorities if it is helpful as they seek to assess the macroeconomic impact of the tragedy, and the budgetary and balance of payments needs that might arise as a result. An IMF team could be dispatched from Washington at the appropriate moment.

"And the Fund stands ready to resume discussions on an economic recovery program that can be supported under the Poverty Reduction and Growth Facility once the immediate tasks of humanitarian relief and reconstruction planning have been addressed.

"This has been a terrible tragedy. But I cannot help noting the scale and speed of the worldwide response, both official and, perhaps more strikingly, at the individual level. This response has, I have seen, been mirrored here in Sri Lanka. I hope that the spirit of national unity that the tragedy invoked will continue to be an important part of the relief effort here."


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