Sri Lanka is expected to receive the second tranche of the IMF disbursement of USD 330 million next month said Secretary to the Treasury, Mahinda Siriwardana at the Organisation of Professional Associations of Sri Lanka (OPA) organized ‘Navigating Economic Recovery :Sri Lanka’s Fiscal Policy, Investment Strategies and Future’ event on Monday.
The first review of the program was concluded in October 2023 and both parties reached a Staff Level Agreement (SLA) on October 19, 2023 which will result in releasing the second tranche of the program amounting to around USD 330 next month. In addition to receiving USD 330 million it is a signal provided to the world that Sri Lanka’s macroeconomic reforms remain on track.
This creates the confidence required to enable financial market transactions and FDI into the Sri Lankan economy. “Receiving the second tranche would also unlock additional funding from other development partners such as the World Bank and the Asian Development Bank.”
Commenting on the IMF proposals he said that the Government successfully achieved most of the targets as scheduled. “Some targets include complex structural reforms with lengthy legislative processes and naturally they were delayed. But they are currently being implemented.”
The continuity of the IMF programme and debt restructuring process is crucial to ensure global confidence in the Sri Lankan economy, enabling the country to continue to engage in trade finance and regular financial market transactions. Following this budget, the next critical milestone would be the process of external debt restructuring and Sri Lanka has asked its external creditors to accept proposals that were forwarded.
“Sri Lanka has already provided all groups of creditors with indicative restructuring scenarios that will enable the achievement of the debt reduction targets set by the IMF. It is now up to external creditors to come to an agreement with Sri Lankan authorities on a debt treatment that helps achieve these targets. China Exim Bank has already come to an understanding with Sri Lanka regarding such a debt treatment. The next step would be for the Official Creditor Committee (co-chaired by Japan, India, and France) to provide a similar understanding. “e are very closely working with all international partners and respective parties, and we are very hopeful that this will be materialized soon.”
He also said that the Sri Lankan economy is expected to move to positive territory from the last quarter of 2023 due to the initiatives taken over the last 18 months which helped broadly establish initial economic stability. “However, there is a long way to go to maintain this stability and people must help the government’s reform agenda. The budget provides the stepping stones for a shift from economic stabilisation to growth.”
Shirajiv Sirimane