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Official Creditor Committee Urges Sri Lanka to Engage with Private Creditors for Comparable Debt Terms

The Official Creditor Committee (OCC) for Sri Lanka has announced its expectation that Sri Lankan authorities will continue to engage with private creditors to reach an agreement on terms at least as favorable as those offered by the OCC as soon as possible.

In a statement issued late Wednesday, the OCC emphasized that these engagements will ensure the overall debt treatment granted to Sri Lanka aligns with the parameters of the IMF program.

The announcement followed the Sri Lankan government’s confirmation of a Memorandum of Understanding (MoU) inked in Paris between Sri Lankan authorities and the OCC, co-chaired by France, Japan, and India.

“Since the Official Creditor Committee (OCC) and Sri Lanka agreed on the main parameters of a debt treatment consistent with those of the Extended Fund Facility (EFF) arrangement between Sri Lanka and the IMF on November 23, 2023, the OCC and Sri Lanka have continued discussions to finalize the agreement in a Memorandum of Understanding (MoU). The OCC has also engaged extensively with Sri Lankan authorities, the IMF, the World Bank, as well as China and Sri Lanka’s private creditors to ensure comparability of treatment,” the statement read.

On June 26, 2024, the OCC and Sri Lanka finalized the MoU based on the main parameters of the debt treatment agreed upon in November 2023. This progress enabled the IMF staff to present the second review of Sri Lanka’s EFF arrangement to the IMF Executive Board, paving the way for approval of the third disbursement under the arrangement.

The OCC commended Sri Lankan authorities for their continuous efforts in implementing the necessary reforms for the country’s return to a sustainable path.

The OCC now looks forward to receiving all necessary information from Sri Lanka to ensure comparability of treatment. It also expects Sri Lankan authorities to continue engaging with private creditors to secure an agreement on terms at least as favorable as those offered by the OCC.

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