The International Monetary Fund (IMF) has lauded the agreement between Sri Lanka and the Export-Import Bank of China (Exim Bank) as a “positive step forward” in the island nation’s debt restructuring process. Senior Mission Chief of the IMF, Peter Breuer, commented on the development, expressing the global lender’s readiness to proceed with the first program review once financing assurances from all official creditors are secured.
The Ministry of Finance, Economic Stabilization & National Policies of Sri Lanka announced on October 11 that the country had reached an agreement on key principles and indicative terms of a debt treatment with Exim Bank of China. The agreement in principle covers around USD 4.2 billion of outstanding debt, with the indicative terms expected to create fiscal space for Sri Lanka to implement its reform agenda.
This milestone achievement was anticipated to serve as an anchor in Sri Lanka’s engagement with the Official Creditor Committee and commercial creditors, including bondholders. Subsequently, in October, the IMF team and Sri Lankan authorities reached a staff-level agreement on economic policies, paving the way for the conclusion of the first review of the 48-month Extended Fund Facility (EFF)-supported program.
Upon approval by IMF Management and the IMF Executive Board, Sri Lanka is set to gain access to SDR 254 million (approximately USD 330 million) in financing as part of the IMF-supported program.
