The macroeconomic policy reforms of Sri Lanka have started to give results, the IMF said recently ahead of the upcoming review of the lender’s $2.9 billion bailout programme for the crisis-hit country. The global financial body said that the island nation is expected to finalise agreements with external commercial creditors soon. 

With regards to debt restructuring, Julie Kozack, Communication Department Director, IMF, stressed that Sri Lanka has ‘made sufficiently strong progress’. Speaking at a press conference on Friday, Kozack said, “We do see macroeconomic policy reform starting to bear fruit. Commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth while preserving the financial system’s stability. Colombo’s next steps on debt restructuring are to conclude negotiations with external commercial creditors and implement agreements in principle with the official creditors,” reported PTI.

The executive maintained that Sri Lanka’s programme performance remained strong and the cash-strapped nation managed to meet most of the quantitative and structural conditions or execute it with delay before the upcoming second review of the bailout programme. 

Notably, IMF’s Extended Fund Facility is set to conduct the second review of $2.9 billion bailout package on June 12. The executive board of the lender will meet to consider the review and the Article IV consultation.

Article IV of the IMF’s Articles of Agreement requires the lender to conduct bilateral discussions with members generally on an annual basis. According to the article, one staff team visits the nation and is responsible for collecting and discussing economics and financial data with the country’s officials regarding the economic growth and policies ahead.

The senior executive noted that the debt operations of the island nation at the domestic level have been mostly completed and it is holding debt restructuring discussions. The country’s officials are regularly conducting detailed dialogues with external creditors regarding a memorandum of understanding (MoU) with the official creditor committee and the final agreements with the Export-Import Bank of China. “So, overall, we assess that there has been sufficiently strong progress on the debt restructuring front,” she asserted.

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