Tuesday, September 27, 2022

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EU welcomes IMF – SL staff level agreement on bail out loan

The delegation of the European Union to Sri Lanka says it welcomes the staff-level agreement between the International Monetary Fund (IMF) and Sri Lanka.

The Finance Ministry said it is working on implementing the prior actions agreed upon under the Staff-Level Agreement (SLA) and on securing the financing assurances needed from Sri Lanka’s official bilateral creditors to obtain the adoption of the $ 2.9 billion worth four-year program by the IMF Executive Board.

“The authorities have been working with their international financial and legal advisors on their debt restructuring strategy,” the Finance Ministry said in a statement.

“The authorities further intend to make a presentation to creditors in the next few weeks to update them on the most recent macroeconomic developments in the country, the main areas of the reform package agreed with the IMF staff and the next steps of the debt restructuring process,” it added.

Taking to its official Twitter handle, the EU delegation said it looks forward to continuing cooperation on public finance management and green economy, including export industries.

Earlier this week, IMF staff and the Sri Lankan authorities reached a staff-level agreement to support Sri Lanka’s economic policies with a 48-month arrangement under the Extended Fund Facility (EFF) of about USD 2.9 billion.

The IMF said the objectives of Sri Lanka’s new Fund-supported program are to restore macroeconomic stability and debt sustainability while safeguarding financial stability, protecting the vulnerable, and stepping up structural reforms to address corruption vulnerabilities and unlock Sri Lanka’s growth potential.

Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps, the global lending agency said further in a statement.

An International Monetary Fund (IMF) mission led by Mr. Peter Breuer and Mr. Masahiro Nozaki visited Colombo from August 24 to September 01, 2022 to continue discussions on IMFs support for Sri Lanka and the authorities’ comprehensive economic reform program.

Meanwhile, Japan called on all creditor nations to discuss Sri Lanka’s debt restructuring. “It’s important for all creditor nations, including China and India, to gather to discuss Sri Lanka’s debt restructuring,” Japanese Finance Minister Shunichi Suzuki said.

In response to Japan’s request, China, a major creditor nation of Sri Lanka, said it stands ready to work with relevant countries and international financial institutions to continue to play a positive role in supporting Sri Lanka’s response to current difficulties and efforts to ease debt burden and realize sustainable development.

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