By: Staff Writer
Colombo (LNW):The staff team of the International Monetary Fund (IMF) arrived in Sri Lanka today (May 11).
The IMF said this visit comes as part of the regular consultations between the global lender and the island nation, ahead of the first review mission later this year.
The delegates of the global lender will be staying in Sri Lanka until May 23. They are to call on President Ranil Wickremesinghe this morning soon after the arrival, according to Finance State Minister Ranjith Siyambalapitiya.
According to an IMF statement, the Director of its Asia and Pacific Department, Krishna Srinivasan will be joining this visit from May 12-15.
They will review the progress of Sri Lanka’s economic reform program in several meetings to be held in Colombo by the end of the month, IMF sources conformed.
IMF team will look in to the progress made by the government in the implementation of the IMF sponsored economic reforms program including the whole issue of debt restructuring
Sri Lanka is fully committed to expedite all major socio economic reforms, fast-track the proper implementation and warp-up the debt restructuring by September this year.
The economy will be on a path to recovery from 2024 and the immediate next step in the process for Sri Lanka is to engage in good faith with all creditors and complete it before the first review, in September, sources disclosed.
The program itself is a very ambitious one, in terms of fiscal, monetary, governance and social safety net reforms.
It compels the government to diagnose governance and corruption issues in Sri Lanka as the first country in Asia to conduct a deep problem-solving iniative on this matter under of its commitments stipulated in the program.
Sri Lanka has gazetted a new anti-corruption bill on April 06 after the International Monetary Fund (IMF) unlocked the US$2.9 billion bail out loan which required the crisis-hit nation to address corruption vulnerabilities
The IMF staff team’s visit comes days after the first meeting of Sri Lanka’s official bilateral creditors committee, during which the island nation’s authorities formally presented a request for debt treatment. China, Saudi Arabia and Iran were in attendance as observers.
The committee, co-chaired by India, Japan and France, consists of 17 members and includes Paris Club creditors as well as other official bilateral creditors.
Last month, France, India and Japan unveiled a common platform for talks among bilateral creditors to co-ordinate restructuring of Sri Lanka’s debt.
Sri Lanka owes USD 7.1 billion to bilateral creditors, government data show, with USD 3 billion owed to China, followed by USD 2.4 billion to the Paris Club of creditor nations and USD 1.6 billion to India.
The government also needs to renegotiate more than USD 12 billion of debt in eurobonds with overseas private creditors, and USD 2.7 billion of other commercial loans.
The Extended Fund Facility (EFF) program of the IMF approved by its executive board in March 2023 comes with strict conditionalities for economic reforms.
Sri Lankan authorities are now working closely with its creditors to coordinate and make swift progress towards the debt treatment that restores debt sustainability under the EFF program.
The next step for them is to make good faith efforts to reach a debt agreement with their creditors — private creditors, official creditors and so on. In terms of growth outlook itself, it had a contraction of 8.7 percent 2022.
The country’s growth is contracting at 3 percent in 2023 and then making a mild recovery. But the issue will be for Sri Lanka to implement the program well so that debt can be made sustainable, which is a big difference from previous programs, and the country can be put on the path to prosperity.
