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Sri Lanka to get more ADB, WB budget support loans after IMF review

Sri Lanka is anticipating increased budget support loans following an expected International Monetary Fund (IMF) review in December, according to Central Bank Governor Nandalal Weerasinghe. The loans from the IMF, Asian Development Bank, and World Bank are aimed at aiding budgetary financing. Weerasinghe suggests that this assistance will further reduce domestic borrowing requirements, leading to a faster decline in Treasury bill and bond rates. The goal is to normalize these rates and align them with the policy rates set by the Central Bank. The Governor also expects a faster reduction in market rates, particularly lending rates for small and medium-sized enterprises (SMEs) and other businesses. The collaboration with banks aims to ensure that the benefits of reduced rates reach SMEs. Weerasinghe acknowledges that interest rates typically decline more slowly than they rise. The upcoming IMF review is crucial, with expectations of assurances from official creditors to complete the first review in the following month. IMF Senior Mission Chief Peter Breuer emphasizes the completion of prior actions for the staff report to be submitted to the board, expressing confidence that the process is moving in the right direction.

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