IMF Managing Director Kristalina Georgieva underscored the importance of continued international support and creditor cooperation in advancing Sri Lanka’s economic reforms and restoring debt sustainability.
Speaking to the financial community, she emphasized that agreements reached by Sri Lanka’s authorities with external bondholders and local creditors mark significant progress in the country’s debt restructuring efforts.
The International Monetary Fund (IMF) has been backing Sri Lanka’s ambitious reform agenda through a four-year Extended Fund Facility (EFF) worth approximately $3 billion, approved in March 2023.
This program aims to restore debt sustainability, stabilize macroeconomic conditions, and improve governance. Sri Lanka has made encouraging strides, with economic recovery underway, low inflation levels, and reserve accumulation
IMF staff recently reached an agreement for the third program review, signaling ongoing progress.The debt restructuring milestones include Sri Lanka’s June 2024 memorandum of understanding with the Official Creditors Committee (OCC) and an agreement with China EXIM Bank.
These commitments are designed to align debt treatments with IMF program parameters. Following extended discussions, agreements with both the Steering Committee of the Ad Hoc Group of external bondholders and the Local Consortium of Sri Lanka were finalized, a development the IMF described as pivotal.
Georgieva stated that these agreements, underpinned by IMF policies, will provide substantial external debt service relief, further contributing to the country’s efforts to regain financial stability.
However, she stressed that swift execution of debt restructuring with strong creditor participation is essential for the program’s success. Parallel progress on other debt restructuring efforts remains a critical part of this collective endeavor.
The Sri Lankan authorities reaffirmed their commitment to structural reforms, aiming to transition the economy toward sustained and high growth.
Georgieva noted that international financial institutions, official creditors, and bondholder participation in a debt exchange aligned with sustainability goals are integral to the reform efforts’ success.
The IMF reiterated its dedication to supporting Sri Lanka during this transformative period. “The IMF remains a steadfast partner in assisting Sri Lanka and its people to achieve their economic and social reform goals,” Georgieva said.
Sri Lanka’s reform program continues to demonstrate positive momentum, with IMF staff evaluations affirming that recent agreements align with the objectives of restoring debt sustainability. Georgieva called on all stakeholders to capitalize on this progress and ensure collective action for successful debt restructuring.
As Sri Lanka moves forward with its ambitious agenda, the IMF’s support remains pivotal in helping the nation overcome economic challenges and build a stable and resilient future.
