The International Monetary Fund (IMF) has expressed strong confidence that Sri Lanka will soon finalize agreements with external commercial creditors in line with program parameters.
During a press briefing on Thursday, Julie Kozack, Director of the IMF Communications Department, highlighted significant progress in Sri Lanka's debt restructuring efforts.
Kozack noted that IMF staff and Sri Lankan authorities reached a staff-level agreement on economic policies on March 21st to conclude the second review of the economic reform program and the 2024 Article IV Consultation.
The IMF Executive Board is scheduled to discuss Sri Lanka’s second review and the Article IV Consultation on June 12th.
“We see macroeconomic policy reform starting to bear fruit in Sri Lanka,” Kozack said, pointing to commendable outcomes such as rapid disinflation, robust reserve accumulation, and early signs of economic growth, all while maintaining financial system stability. She affirmed that the program performance is strong, with most quantitative and structural conditionalities for the second review met or implemented, albeit with some delays.
The next steps involve concluding negotiations with external commercial creditors and implementing agreements in principle with official creditors. Domestic debt operations are largely completed, with ongoing discussions continuing for external debt restructuring.
Kozack specified that extensive talks have been held with external official creditors, including discussions on a memorandum of understanding with the official creditor committee and final agreements with the Export-Import Bank of China. Negotiations with external bondholders and the China Development Bank are also at advanced stages.
“There is a strong expectation that agreements with external commercial creditors consistent with program parameters will be reached soon,” Kozack reiterated, assessing the overall progress on the debt restructuring front as sufficiently strong.
