IMF anticipates SL-commercial creditors agreements soon

The International Monetary Fund on Thursday said that there is a strong expectation that agreements with commercial creditors consistent with program parameters will be reached by completion of Sri Lanka’s second review.

IMF Communications Department Director Julie Kozack at a press briefing in Washington DC said that there was significant progress in Sri Lanka’s economic recovery efforts. Kozack provided an overview of recent developments, recalling that on 12 December 2023, the IMF’s Executive Board approved the first review of Sri Lanka’s program, facilitating a disbursement of $ 337 million.

Subsequently, on 21 March 2024, the IMF Staff and Sri Lankan authorities reached a Staff-Level Agreement on economic policies, marking progress towards concluding the second review and the 2024 Article IV Consultation.

However, Kozack emphasised that the completion of the review by the Executive Board hinges on the implementation of prior actions and a financing assurances review. This review aims to ensure ongoing financial support from multilateral partners, assess progress in debt restructuring, and confirm satisfactory advancements.

Kozack noted macroeconomic policy reforms in Sri Lanka are yielding results, including rapid disinflation, robust reserve accumulation, and early signs of economic growth while maintaining financial stability. She underscored the strengthening of public finances due to substantial fiscal reforms, emphasising the necessity of maintaining momentum in reform efforts.

Regarding debt restructuring, Kozack outlined the next steps, emphasising the importance of finalising negotiations with external commercial creditors and implementing agreements with official creditors.

She noted that domestic debt operations, integral to the restructuring process, are mostly completed, expressing confidence that agreements with commercial creditors, consistent with program parameters, will be reached by the conclusion of the second review.