The International Monetary Fund (IMF) says there is a strong expectation that Sri Lanka will reach agreements with commercial creditors, consistent with program parameters, by completion of the second review.
Addressing the IMF’s press briefing, Director of the Communications Department Julie Kozak said, that macroeconomic policy reforms in Sri Lanka are starting to bear fruit.
“Commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth, while preserving stability of the financial system. Public finances have strengthened following substantial fiscal reforms, and it is critical that this reform momentum be continued,” she told reporters in Washington.
Kozak recalled that on December 12, 2023, the IMF’s Executive Board approved the first review of Sri Lanka’s program with the IMF which enabled a disbursement of US$337 million.
On March 21, the IMF Staff and the Sri Lankan authorities reached a Staff-Level Agreement on economic policies to conclude the second review, as well as the 2024 Article IV Consultation.
“Completion of the review by the Executive Board requires, first, the implementation of the prior actions that have been agreed and second, completion of what we call financing assurances review. That review would need to confirm that multilateral partners are continuing their financing contributions to Sri Lanka, and it will also assess progress with debt restructuring, and it will need to conclude that adequate progress is being made,” she said.
Kozak said the next steps on the debt restructuring are to conclude the negotiations with external commercial creditors and to implement agreements in principle with official creditors.
She said the domestic debt operations, part of the debt restructuring, are largely completed, and there is a strong expectation that agreements with commercial creditors consistent with program parameters will be reached by completion of the second review.
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