Sri Lanka must complete debt restructuring process by September, reiterates IMF

The IMF reiterated on Tuesday that Sri Lanka must complete its debt restructuring process by September when the global lender will conduct a formal review of the rescue facility it gave to the cash-strapped country. The IMF extended a roughly $3 billion rescue facility to debt-ridden Sri Lanka on March 20, helping to stabilise the country’s economy following a disastrous economic crisis last year. The IMF said in a statement published on Tuesday at the end of a nearly two-week staff tour to Colombo to examine Sri Lanka’s progress since the deal was struck that the two sides had addressed debt restructuring issues. “Sri Lanka must achieve debt restructuring by its first review due in September. We also discussed progress on debt restructuring, noting the ongoing discussions with both foreign and domestic creditors," the statement said. Debt-ridden Sri Lanka is still struggling to normalise its crisis-hit economy after it declared its first-ever debt default in April last year. On Monday, Sri Lankan President Ranil Wickremesinghe said that Sri Lanka’s debt restructuring programme will be completed by September this year and its bankrupt economy will be brought to a stable level. However, the IMF wants to ensure Sri Lanka fulfils its commitment. “Achieving timely restructuring agreements with creditors in line with the program targets by the time of the first review is essential to restoring debt sustainability”. During its two weeks of assessment, the IMF team was checking the progress made since the agreement was reached for the $3 billion bail-out facility over a period of 4 years. They discussed recent macroeconomic and financial sector developments. “Following strong policy efforts, the macroeconomic situation in Sri Lanka is showing tentative signs of improvement, with inflation moderating, the exchange rate stabilizing, and the Central Bank rebuilding reserves buffers. However, the overall macroeconomic and policy environment remains challenging,” the statement said. “We welcome the authorities’ ongoing efforts in meeting key commitments under the Fund-supported program. Performance under the program will be formally assessed in the context of the first review of the Extended Fund Facility arrangement, which is expected to be undertaken in September 2023," the statement further added. 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. Read all the  Latest News,  Trending News,  Cricket News,  Bollywood News, India News and  Entertainment News here. Follow us on  Facebook,  Twitter and  Instagram.