IMF /WB event in Morocco suggests different debt rework for Sri Lanka

The International Monetary Fund (IMF) says there is a need to develop a clear framework that can help borrower countries such as Zambia, Sri Lanka, Ghana, and Ethiopia understand the process and agree on expectations.

Experts who spoke at a closed-door event held alongside the International Monetary Fund (IMF) Annual Meetings in Morocco noted that the IMF must insist on governance reforms in Sri Lanka and cautioned that the targets in the ongoing IMF program could set Sri Lanka up for another default.

The event, titled ‘Sri Lanka: Pathways to Debt Sustainability and Governance Reform’ was held on Friday October 13, at the Kenzi Menara Palace in Marrakesh, Morocco, according to official sources..

Global Sovereign Advisory Senior Research Analyst Theo Maret expressed concern over the IMF’s debt sustainability model for Sri Lanka.

The model’s unambitious targets, he argued, could set Sri Lanka up for another default.

By comparing the IMF’s different sustainability models and targets set for countries like Zambia, he highlighted the need for a re-evaluation of the IMF’s approach towards Sri Lanka, especially concerning external debt restructuring targets.

Mr. Maret emphasised the importance of setting separate programme targets for external debt and urged a review of the market-access model used by the IMF for middle-income countries facing balance of payments difficulties.

The event fostered a rich dialogue among various stakeholders, including professionals and high-ranking members of the Sri Lankan delegation to the IMF annual meeting.

The discourse laid bare the complex interplay between governance reforms, debt sustainability, and the role of international bodies in navigating these challenges. (Bandula)