## Press Release: IMF Executive Board Approves US$157.5 million in Emergency Assistance for Sri Lanka

_IMF News, March 4, 2005_

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## Bibliographic details
- Published: March 4, 2005

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### Approval and purpose
- The Executive Board of the International Monetary Fund (IMF) approved SDR 103.35 million (about US$157.5 million) in emergency assistance for Sri Lanka.
- The amount approved is available immediately to help the government deal with the devastating effect of the tsunami that struck the island on December 26, 2004.
- The IMF provides emergency assistance to member countries hit by natural disaster to help them meet immediate balance of payments financing needs, and maintain or restore macroeconomic stability.

### Human toll and damages
- Human impact:
  - 31,000 people dead
  - 6,000 still missing
  - hundreds of thousands displaced
- Sectoral damages:
  - Commercial centers in the western part of the country were largely unaffected
  - Fisheries and tourism sectors sustained severe damages
- Infrastructure replacement cost estimated at US$1.5-1.6 billion, or 7½ percent of GDP

### Economic impact and projections
- Reconstruction will offset much of the impact on economic growth.
- GDP growth in 2005 is now estimated at 5¼ percent, the same level as in 2004.
- Rehabilitation expenditure will put a great strain on the balance of payment and the budget.
- Emerging gaps in 2005-2007 will need to be filled, in part, through support from the international community.
- Imports for relief and reconstruction will put pressure on international reserves.

### Terms of the emergency assistance
- Repayment: eight equal quarterly installments over 3¼ to 5 years from the disbursement date.
- Rate of charge: subsidized to 0.5 percent per annum for PRGF-eligible countries hit by a natural disaster, subject to resource availability (See Public Information Notice No. 05/8).

### IMF views, recommendations, and government actions (Mr. Takatoshi Kato, Deputy Managing Director and Acting Chair)
- Immediate observations:
  - The IMF extends its deepest sympathy to the people of Sri Lanka for the destruction, suffering, and loss of life caused by the tsunami of December 26.
  - Repair and reconstruction effort will require at least three years of sustained effort.
- Commendation of government and international response:
  - The government, with the support of the international community, responded swiftly, launching the national operations center to coordinate rescue and relief efforts.
  - Follow-up measures include a grant scheme for affected individuals, a concessional loan program to assist small and medium enterprises, and development of a plan for rehabilitation and reconstruction.
- Policy and implementation guidance:
  - Reconstruction should sustain economic growth around current levels, but imports for relief and reconstruction will pressure reserves.
  - Support from the international community, including IMF emergency assistance, will be crucial for financing needed imports.
  - Ensuring that pledged aid commitments from donors are effectively mobilized and efficiently used is crucial for success of reconstruction and recovery.
  - Authorities should be mindful of limits to implementation capacity and potential inflationary pressures.
  - Reassurance: the government intends to keep domestic financing of the budget at the pre-tsunami level and contain money growth.
  - The government is working with stakeholders on a framework to monitor the disbursement and use of aid to enhance transparency and accountability.
  - The government has indicated its intention to pursue steadfastly the medium-term reform agenda laid out in the 2005 budget, with priority given to fiscal sustainability.
  - The authorities' commitment to macroeconomic stability, together with continued international support and timely delivery of appropriate international assistance, will be essential to help Sri Lanka recover.

*Press Release: IMF Executive Board Approves US$157.5 million in Emergency Assistance for Sri Lanka — March 4, 2005*

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## References

- [Sri Lanka and the IMF](http://www.imf.org/external/country/LKA/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [See Public Information Notice No. 05/8)](https://www.imf.org/external/np/sec/pn/2005/pn0508.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0552_