Thursday, March 30, 2023

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SL President seeks bilateral creditors coordination to unlock IMF EFF

Sri Lanka is now almost certain that the US $2.9 billion IMF’s Extended Fund Facility (EFF) would be unlocked soon, and following its release more funds are expected to flow into Sri Lankan coffers, from the World Bank, Asian Development Bank, and other agencies.

However, negotiations over debt restructuring especially with private creditors is still to commence as it is expected to create more complications and prolong for years.

Zambia which received IMF support to overcome Restricted Default in August 2022, still negotiates over debt restructuring.

Although China had issued a letter of assurance to facilitate IMF EFF release, no one knows what is in its plan when restructuring negotiations start in a couple of months

Under this background, in an open letter to Sri Lanka’s official bilateral creditors and the Paris Club creditors, President Ranil Wickremesinghe has requested to foster the coordination required for the International Monetary Fund (IMF) supported programme.

The President has also assured transparency and regular reporting on Sri Lanka’s indebtedness in the letter,

President Wickremesinghe has praised the diligence and expressed his gratitude to the Paris Club creditors and Japan in particular, and to India and China for enabling the cooperation required to arrive at this point and explicitly delivering IMF-compatible financing assurances.

He has conveyed gratitude for other creditor countries that answered the Paris Club creditors’ call to join them.

Further, he has mentioned in the letter that the Sri Lankan government has deployed all efforts to demonstrate its commitment to the EFF (Extended Fund Facility) program and relentlessly engage on the path to reforms.

Thus, a robust reform agenda aimed at achieving debt sustainability, strengthening governance, widening the social safety nets supporting the most vulnerable, and ensuring the growth of an inclusive economy attractive to international business, has been introduced.

He said this is how the government would improve people’s lives and ensure they are first in line to benefit from improvements in our economic conditions.

“The IMF-supported program will be critical to achieving this vision for the country,” he claimed.

Hence, this new era starts with the full implementation of the IMF-supported program and the resolution of Sri Lanka’s debt situation with the official bilateral creditors as long standing partners, as well as with the commercial creditors.

The Head of State also called on the Paris Club bilateral partners, Japan in particular, together with all other official bilateral partners, including India and China, to garner and foster coordination.

The relevant letter also ensured that Sri Lanka committed not to resume debt service to any creditor unless that creditor agrees on a comprehensive debt treatment in line with IMF-supported program parameters and the comparability of treatment principle.

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