The International Monetary Fund (IMF) should be “a lot tougher” on Sri Lanka’s structural reforms as past IMF programmes have failed to address Sri Lanka’s low tax revenue and State-owned enterprises (SOEs), a former IMF official said.

Speaking at a webinar held by the UK-based think-tank, Oxford Global Society last week, former IMF Institute of Capacity Development Director and former IMF Africa Department Deputy Director Dr. Sharmini Coorey said that the IMF should have been a lot tougher on structural reforms in the past 17 programmes that Sri Lanka underwent.

“I think this is really critical and keeps coming up even in this programme. I can see them now going all soft on structural reforms, not macro. I would like to see an IMF that is tough on structural reforms,” She said.

Moreover, she added that the IMF should step up more strongly in protecting debtor countries and get the money to the debtor as soon as they have agreed to a programme.

“The fact that it (disbursing funds) took another six months was very painful for Sri Lanka,” she said. 

She also said that the IMF should not apply a financial assurance policy on countries going through a crisis like Sri Lanka and go with the initial disbursement of funds till the debt negotiations work themselves out.

She noted that even after the first review, Sri Lanka is yet to have worked out a debt deal with its creditors.

“I actually think Sri Lanka has moved faster than Zambia (in debt restructuring) partly because we are able to create some competition between the creditors,” Coorey said.

The Export-Import Bank of China has already reached a preliminary debt deal with Sri Lanka to cover about $ 4.2 billion while the Official Creditor Committee consisting of India and the Paris Club is yet to reach a deal.

Private bondholders have suggested macro-linked bonds to treat $ 12 billion in debt which has not received a favourable response from Sri Lanka.