Pivotal for debt restructuring efforts:
IMF awaiting further assurances from creditor groups:
Sri Lanka has received commendation from the International Monetary Fund (IMF) for its handling of debt negotiations with China’s Export-Import (Exim) Bank, a move that is pivotal for the country’s debt restructuring efforts and economic recovery, international media reported yesterday.
Peter Breuer, a senior representative from the IMF involved in the Sri Lanka process, has highlighted the importance of the agreement involving approximately US$ 4.2 billion in debt. This accord is crucial for the continuation of Sri Lanka’s fiscal reforms and for securing further support from international creditors.
This has come in the backdrop of the IMF awaiting assurances from various creditor groups, including the Official Creditor Committee (OCC), to advance the review of Sri Lanka’s Extended Fund Facility (EFF) IMF Program. The review by the IMF Executive Board is a necessary step before proceeding with the next phase of economic support (the second tranche of the US$ 2.9 billion IMF programme). The IMF Executive Board will be meeting on December 6 in Washington, DC, to review Sri Lanka’s case.
On October 11, 2023, Sri Lanka’s Ministry of Finance had announced reaching a Principal Understanding on debt terms with the Exim Bank of China. This development followed an agreement reached in late October 2023 between the IMF and Sri Lanka on economic policies for the first phase of the EFF review.
This consensus set the stage for Sri Lanka to potentially access Special Drawing Rights (SDR) equivalent to US$ 330 million upon approval by relevant authorities and contingent on engaging International Sovereign Bond (ISB) holders and other commercial creditors.
Breuer’s endorsement underscores international efforts to assist Sri Lanka in stabilising its economy and managing its financial situation.The support from major creditors like China’s Exim Bank is seen as laying a foundation for sustained economic recovery and stability in Sri Lanka.
