Agreements with external commercial creditors expected
The International Monetary Fund (IMF) expects Sri Lanka to soon reach agreements with external commercial creditors consistent with program parameters.
“So overall, we assess that there has been sufficiently strong progress on the debt restructuring front,” Julie Kozack, Director of the IMF Communications Department, said during a press briefing on Thursday (06).
On March 21st, IMF staff and the 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.
Kozack confirmed that on June 12th, the IMF Executive Board will meet to discuss Sri Lanka’s second review and the Article IV Consultation.
Responding to questions on Sri Lanka, she said, “In Sri Lanka, we do see macroeconomic policy reform starting to bear fruit.” Commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth while preserving the stability of the financial system.
The IMF Spokesman said that the program’s performance is strong. Most quantitative and structural conditionality for the second review was met or implemented with delay, and reforms are still ongoing in some areas.
“The next steps in the debt restructuring are to conclude negotiations with external commercial creditors and implement agreements in principle with the official creditors. The domestic debt operations are largely completed, and debt restructuring discussions are continuing.”
More specifically, she said the authorities have been holding extensive discussions with external official creditors regarding an MOU with the official creditor committee and the final agreements with the Export-Import Bank of China.
Discussions with external bondholders continue with the aim of reaching agreements in principle soon, Kozack said, adding that negotiations with the China Development Bank are also at an advanced stage.
“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.”