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Sri Lanka has made ‘sturdy progress’ on debt restructuring entrance: IMF

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Julie Kozack. File
| Photo Credit: Photo: X/@IMFSpokesperson

“Sri Lanka’s macroeconomic policy reforms have started to “bear fruit” and the nation is anticipated to achieve agreements with exterior business collectors quickly,” the IMF has stated forward of the second overview of its $2.9 billion bailout programme to the cash-strapped nation.

Addressing a press convention on June 7, International Monetary Fund (IMF) Communication Department Director Julie Kozack asserted that Sri Lanka has made “sufficiently strong progress on the debt restructuring front”.

She stated that the island nation’s programme efficiency is “strong”, with most quantitative and structural conditionality for the second overview met or applied with delay, including that reforms are nonetheless ongoing in some areas.

The second overview of the IMF’s Extended Fund Facility below the $2.9 billion bailout of Sri Lanka has been set for June 12. Ms. Kozack confirmed that the IMF’s Executive Board will meet to debate the second overview and the Article IV Consultation.

Under Article IV of the IMF’s Articles of Agreement, the worldwide lender holds bilateral discussions with members, usually yearly, with a employees staff visiting the nation, gathering financial and monetary info, and discussing with officers the nation’s financial developments and insurance policies.

“In Sri Lanka, we do see macroeconomic policy reform starting to bear fruit,” Ms. Kozack stated, including that “commendable outcomes” embody speedy disinflation, sturdy reserve accumulation, and preliminary indicators of financial progress whereas preserving the monetary system’s stability.

She stated that Colombo’s subsequent steps on debt restructuring are to conclude negotiations with exterior business collectors and implement agreements in precept with the official collectors.

Ms. Kozack stated Sri Lanka’s home debt operations have largely been accomplished, and debt restructuring discussions are persevering with.

“The authorities have been holding extensive discussions with external official creditors regarding an MOU (memorandum of understanding) with the official creditor committee and the final agreements with the Export-Import Bank of China,” she stated, including that talks with the China Development Bank are additionally at a sophisticated stage.

“There is a strong expectation that agreements with external commercial creditors consistent with programme parameters will be reached soon. So, overall, we assess that there has been sufficiently strong progress on the debt restructuring front,” she stated.

In March, the Washington-based IMF stated it reached a staff-level settlement with Sri Lanka for the subsequent section, enabling entry to $337 million from the almost $3 billion bailout authorized in 2023 for the cash-strapped nation. Two tranches of $330 million every have been launched in March and December 2023.

In April 2022, Sri Lanka declared its first-ever sovereign default since gaining independence from Britain in 1948.

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