June 08, Colombo (LNW): The International Monetary Fund (IMF) has expressed strong optimism that Sri Lanka will soon finalize agreements with external commercial creditors in line with program parameters. Julie Kozack, Director of the IMF Communications Department, stated during a press briefing on Thursday (06) that there has been “sufficiently strong progress on the debt restructuring front.”
On March 21st, IMF staff and Sri Lankan authorities reached a staff-level agreement on economic policies to conclude the second review of the economic reform program and the 2024 Article IV Consultation. The IMF Executive Board is scheduled to meet on June 12th to discuss this review and the Article IV Consultation.
Kozack noted that Sri Lanka’s macroeconomic policy reforms are yielding positive results, such as rapid disinflation, robust reserve accumulation, and initial signs of economic growth, while maintaining financial system stability. She highlighted that the program performance is strong, with most quantitative and structural benchmarks for the second review met or delayed, and ongoing reforms in some areas.
The next steps in the debt restructuring process include concluding negotiations with external commercial creditors and implementing agreements in principle with official creditors. Domestic debt operations are nearly complete, and discussions with external official creditors, including an MOU with the official creditor committee and final agreements with the Export-Import Bank of China, are well underway. Negotiations with external bondholders and the China Development Bank are also advancing.
“There is a strong expectation that agreements with external commercial creditors consistent with program parameters will be reached soon. So overall we assess that there has been sufficiently strong progress on the debt restructuring front,” Kozack reiterated.
