SL must use cash flow relief to rebuild fiscal and external sector buffers - Treasury Secretary

Overall, Sri Lanka's public debt restructuring provides the country with significant debt relief, which is sufficient to restore debt sustainability as confirmed by the International Monetary Fund's (IMF) assessment, Treasury Secretary Mahinda Siriwardana stated.

"Sri Lanka must use the cash flow relief and fiscal space provided to rebuild its fiscal and external sector buffers, as envisaged in the IMF supported reform programme, to ensure that future debt service can be met without any difficulties," emphasised Mr Siriwardana. 

The Treasury Secretary made the comments during a presentation he made at the Staff Meeting held with the Senior Officials of the General Treasury/ Ministry of Finance, Planning and Economic Development on Wednesday (1). 

He recounted that the then government commenced discussions with the IMF in April 2022 with a view to implementing an IMF-supported macroeconomic reform programme to address the root causes of the economic crisis. "The IMF's lending rules require that a county's debt sustainability is restored, and therefore Sri Lanka simultaneously commenced the process of restructuring its public debt. In accordance with the norms of the global sovereign debt restructuring architecture, Sri Lanka hired globally renowned financial advisors Lazard Frères and international legal advisors Clifford Chance to support the process of restructuring the debt."

Following is the link to the full supplementary note for the presentation made by Mr Siriwardana: https://www.treasury.gov.lk/api/file/bd447900-840d-4c28-bfcb-7c78fe79bbf2