Colombo: The IMF, which extended a $ 3 billion bailout facility to debt-ridden Sri Lanka, is currently on a consultation mission here to check on the country’s progress of the programme ahead of the expected formal review in September.
The State Minister for Finance Shehan Semasinghe said the IMF senior team members– Peter Breuer, the IMF chief for Sri Lanka and Sarwat Jahan, the IMF representative in Sri Lanka– met President Ranil Wickremesinghe in his capacity as the Finance Minister Thursday.
The Washington-based global lender’s staff team is currently on a visit to Sri Lanka from May 11 to May 23.
“They are on a consultation mission ahead of the September review meeting. We discussed the progress so far in order to ensure that everything falls in line,” Semasinghe said.
President Wickremesinghe has expressed the government’s commitment to fulfilling all reforms outlined by the Washington-based global lender.
The IMF bailout, the 17th in Sri Lanka’s history, called for hard economic reforms such as tax hikes, utility rate hikes and divesting loss-making state business enterprises which have been met with stiff political opposition.
Having obtained the $ 3 billion facility, Sri Lanka is currently negotiating debt restructuring with bilateral and multilateral creditors.
President Wickremesinghe had said by mid-May the restructuring programme would come into effect.
Tuesday, the island nation’s authorities formally presented Colombo’s request for debt treatment at the first meeting of the official creditor committee, co-chaired by India, Japan, and France.
“We reiterated our commitment to transparency and compatibility of treatment with all our creditors and underlined the need to address the country’s debt situation as soon as possible,” Semasinghe had said.
Sri Lanka is yet to announce its plan for external and local debt restructuring, and according to officials, consultations on both aspects are underway.
The International Monetary Fund’s Executive Board March 20 approved a 48-month extended arrangement under its Extended Fund Facility (EFF) with an amount of SDR 2.286 billion (about $ 3 billion).
Special Drawing Rights (SDR) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF).
The negotiations took a long time as the IMF wanted financing assurances from Sri Lanka’s creditors.
According to official figures, Sri Lanka’s total debt is $ 83.6 billion, of which foreign debt amounts to $ 42.6 billion and domestic debt amounts to $ 42 billion.
In April 2022, Sri Lanka declared its first-ever debt default, the worst economic crisis since its independence from Britain in 1948, triggered by forex shortages that sparked public protests.
Months-long street protests led to the ouster of the then-president Gotabaya Rajapaksa in mid-July. Rajapaksa had started the IMF negotiations after refusing to tap the global lender for support.
PTI