Question:
Sri Lanka has engaged in sixteen IMF programmes in the past, but governments failed to implement most of them successfully mainly due to
(1) the lack of commitment in meeting agreed reforms attached to such programmes.
(2) the availability of adequate funds from international capital markets.
(3) the heavy reliance on currency swaps to overcome the shortage of foreign exchange.
(4) the smooth inflow of foreign direct investments making IMF assistance unnecessary.
(5) the adaptation of flexible exchange rate policy resulting substantial improvement in country’s external reserves.
Correct Answer:
(1)
Answer Explanation:
Historically, IMF financial assistance comes with strict conditions (structural reforms, tax adjustments, privatization). Successive Sri Lankan governments have often abandoned these programmes prematurely due to a lack of political commitment to implement these difficult, often unpopular, economic reforms.
Topic: Sri Lankan Economy Year: 2022
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