Sri Lanka told to sign MoU with official creditors

Sri Lanka has been told to sign a Memoranda of Understanding with its official creditors on debt treatment.

The International Monetary Fund (IMF) said that?Sri Lanka has reached important milestones in putting debt on the path towards sustainability.

Peter Breuer, IMF Senior Mission Chief for Sri Lanka told reporters today that?Sri Lanka?s agreements-in-principle with the Official Creditors Committee and the Export-Import Bank of China on debt treatments are consistent with the program targets.

“It is now important for the Sri Lankan authorities and the official creditors to sign the respective Memoranda of Understanding. Timely implementation of the agreements, together with reaching a resolution with external private creditors, should help restore Sri Lanka?s debt sustainability over the medium term,” he said.

Breuer said IMF staff will continue to assist the authorities with creditor coordination in line with the IMF?s policies.

The publication of a Governance Diagnostic Report, the first in Asia and a structural benchmark under the program, is another commendable step taken by the authorities.

“Continued commitment to improving governance and timely implementation of the report?s recommendations can deliver tangible economic gains to the citizens of Sri Lanka. We look forward to further engagement and collaboration with stakeholders and civil society organizations on this critical reform area,” Breuer said.

The IMF welcomed the authorities? firm commitment to strengthen social safety nets, including through a minimum spending floor, the selection of beneficiaries through objective eligibility criteria, and well-targeted spending through the dynamic Social Registry.

“We emphasize the importance of continuing to support the poor and the vulnerable,” he said.

The Executive Board of the International Monetary Fund had earlier approved the disbursement of approximately US$ 337 million to Sri Lanka as part of a bailout package.

The IMF said the Executive Board completed the first review under the 48-month Extended Fund Facility with Sri Lanka, providing the country with access to SDR 254 million (about US$337 million) to support its economic policies and reforms.

All but one performance criteria and all but one indicative targets were met at end-June. Most structural benchmarks due by end-October 2023 were either met or implemented with delay. (Colombo Gazette)