IMF says Sri Lanka yet to finalize deal with bondholders and creditors

The International Monetary Fund (IMF) says Sri Lanka is yet to finalize agreements with bondholders and creditors.

Julie Kozack, Director of Communications at the IMF said that the initial debt restructuring negotiations with external bondholders ended in mid-April without an agreement, and discussions are continuing with a view to reaching agreement in principle.

“And on the official creditor side, these agreements in principle still need to be finalized,” she said.

On March 21st of this year, the IMF staff and the Sri Lankan authorities reached a staff-level agreement for the second review of the program and also concluded the and also finished the Article IV mission.

“Completion of the review by the Executive Board of the IMF requires two things. The first is implementation by the authorities of the agreed prior actions, and the second is the completion of the financing assurances review, and that would confirm multilateral partners, financing contributions. And the financing review will also assess adequate progress with debt restructuring,” Julie Kozack said.

With respect to Sri Lanka’s economic performance, Julie Kozack said that macroeconomic policies in Sri Lanka are starting to bear fruit.

“Commendable outcomes include a rapid decline in inflation, robust reserve accumulation, and initial signs of economic growth, while also preserving stability in the financial system. Overall, program performance has been strong,” she added.

The next steps with respect to the debt restructuring are to conclude negotiations with external private creditors and to implement the agreements in principle with Sri Lanka’s official creditors. (Colombo Gazette)