April 18, Colombo (LNW): In response to Sri Lanka’s recent challenges in reaching a debt restructuring agreement with international bondholders, the International Monetary Fund (IMF) has pledged its support and readiness to facilitate discussions between the parties involved.
An IMF spokesperson confirmed on Thursday (18) that the organisation stands prepared to provide a formal assessment once a tentative agreement-in-principle is reached.
“We hope an agreement consistent with the parameters of the IMF-supported programme and official creditors’ Comparability of Treatment requirements can be reached soon, ahead of completing the second review under the programme,” the spokesperson asserted.
Sri Lanka’s failure to secure a restructuring deal earlier this week, involving approximately $12 billion in debt, has raised concerns over the potential delay in the disbursement of the third tranche of its $2.9 billion IMF programme, scheduled for June.
According to government sources, one of the primary obstacles in the negotiation process was the misalignment between the “baseline parameters” outlined in the bondholders’ proposal and those stipulated within Sri Lanka’s IMF programme.
The IMF underscored the importance of swift and continued discussions between both parties, urging them to work towards a mutually beneficial resolution.
Sri Lanka intends to engage in consultations with the IMF to evaluate whether the latest proposals discussed with bondholders align with the parameters established in its bailout programme.
Having defaulted on its foreign debt in May 2022, Sri Lanka embarked on negotiations with bilateral creditors, eventually securing a preliminary agreement with China, India, and the Paris Club in November of the same year.
The country’s dire financial situation, exacerbated by dwindling foreign exchange reserves, has led to its most severe economic crisis since gaining independence in 1948.
Critical shortages of essential commodities, including fuel, cooking gas, and medicine, have further compounded the challenges faced by Sri Lanka amidst its ongoing debt restructuring efforts.
