The IMF has announced ahead of the following review of Sri Lanka’s$ 2.9 billion loan program that the state is expected to reach contracts with external corporate creditors. International Monetary Fund ( IMF) Communication Department Director Julie Kozack addressed a press conference on Friday, claiming that Sri Lanka has made” sufficiently strong progress on the debt restructuring front.”
She noted that the island nation’s program functionality is” strong,” with the majority of the following review’s statistical and architectural conditionality being met or delayed, and that changes are still being worked out in some areas.
The IMF Extended Fund Facility evaluation is scheduled for June 12 for the USD 2.9 billion Sri Lanka loan.
Kozack confirmed that the Article IV Consultation and the Second Review may be discussed at a meeting of the IMF’s Executive Board.
Under Article IV of the IMF’s Articles of Agreement, the international merchant holds diplomatic discussions with members, generally every year, with a team group visiting the country, collecting economic and financial data, and discussing with officials the country’s economic developments and policies.
” In Sri Lanka, we do see macroeconomic policy reform starting to bear fruit”, Kozack said, adding that” commendable outcomes” include rapid disinflation, robust reserve accumulation, and initial signs of economic growth while preserving the financial system’s stability.
She stated that Colombo’s next steps in the restructuring of its debt are to argue discussions with additional business creditors and put into place fundamental agreements with the standard creditors.
Kozack said Sri Lanka’s private loan activities have generally been completed, and debt restructuring conversations are continuing.
She stated,” The authorities have been having fruitful 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,” adding that discussions with the China Development Bank are also in progress.
There is a high likelihood that agreements with exterior commercial creditors may be reached immediately in accordance with the program’s terms. But, nevertheless, we assess that there has been properly strong progress on the loan restructuring entrance”, she said.
The Washington-based IMF announced in March that it had reached a team level agreement with Sri Lanka for the next stage, allowing the cash-strapped nation to receive USD 337 million from the roughly USD 3 billion loan approved in 2023. In March and December 2023, 330 million Dollar were released in two tranches.
Sri Lanka declared its second sovereign default since gaining independence from Britain in 1948 in April 2022.
