Sri Lanka not out of the woods yet & important to safeguard hard won gains: IMF

The International Monetary Board (IMF) stressed yesterday that even though Sri Lanka made a lot of progress, the country is not out of the woods yet, and it is important to safeguard those hard-won gains.

Addressing at the IMF press briefing held yesterday, Julie Kozack, Director of the Communications Department said that it's very important to note, of course, that for the upcoming elections, this is really for the people of Sri Lanka to decide. "Achieving the program's objectives is a key priority to give Sri Lanka a chance to emerge from one of its worst crises in history,"

"On June 12th, our Executive Board completed the 2024 Article IV Consultation and the Second Review of the EFF program.  That provided the country with access of about $336 million U.S. dollars.  Program performance remains strong.  Reform efforts are bearing fruit.  Economic growth is starting to revive.  Inflation is coming down.  Reserves, international reserves are increasing, and revenue mobilization is improving.  Nonetheless, important vulnerabilities do remain, and sustaining reform momentum is going to be essential," the Spokesperson said.

Responding to a question with regard to private creditors reportedly submitted their proposal with regard to the debt restructuring parameters to the IMF, the Spokesperson said that the execution of the domestic debt restructuring and finalizing the agreement with the official creditor committee and China EXIM Bank are major milestones. 

The Staff assessed that the -- what's the so-called joint working framework, and the Staff has also provided an assessment of this framework to the Sri Lankan authorities.  Furthermore, at the request of the Sri Lankan authorities, the IMF staff has shared this assessment with the financial advisors of the country's bondholders, he pointed out.

"So that is where our role has been on the debt.  And I also just want to reemphasize that with respect to debt restructuring, the IMF does not take part in the negotiations.  In the debt restructuring negotiations and discussions, those negotiations are between the member country and its creditors, with the IMF making an overall assessment of -- of debt sustainability.  And I would also refer you to a Press Release issued by the Sri Lankan authorities which contains further information,"

"With respect to the other question on the DSA [debt sustainability assessment], I think my broad response is essentially the same as it was to some of the earlier questions.  First, with respect to the upcoming presidential elections, this is for the people of Sri Lanka to decide.  From the IMF's position, what we see is a program that has made significant achievements, but that it is important to safeguard these achievements to enable the country to fully emerge from one of its worst crises," he said.

The timing of the Third Review will be discussed with the government following the elections.

"So we will move forward with program discussions after the presidential elections take place and a new government, or the outcome based on the choice of the people, we will be ready to -- to go with that," he said.