IMF discussions continued with aim to reach Staff-Level Agreement: Finance Ministry

COLOMBO (News 1st); Sri Lankan authorities have engaged in discussions with the IMF with a view towards entering into an Extended Financing Facility (EFF) to support Sri Lanka's macroeconomic reform programme. 

After the Spring Meetings with the IMF in April 2022, a virtual mission took place in early May, followed by an IMF mission to Colombo from 20th to 30th June, the Ministry of Finance said.

Moreover, the Finance Ministry informed that discussions continued virtually with a view to reaching a Staff Level Agreement (SLA), while substantial progress was made during discussions on the fiscal, monetary and structural reforms necessary to stabilize the economy.

Social unrest and political instability which led to several changes in administration since May delayed making a significant progress towards reaching a SLA, the Finance Ministry said.

However, with the formation of the new government, technical discussions between the Sri Lankan authorities and the IMF have now resumed with a view to finalising the few remaining policy matters that need to be agreed upon prior to reaching a SLA. 

A Staff Level Agreement would be an important milestone towards IMF Board approval for the EFF programme, which in turn would help unlock bridging finance to support much needed external financing for Sri Lanka.

In parallel. Sri Lankan authorities are working with Debt Restructuring Advisors, Lazard and Clifford Chance, to reach consensus on debt restructuring arrangement with creditors. The advisors have made considerable progress in the analytical framework for the debt operation, prior to formal engagements with Sri Lanka's creditors. 

The Government is committed to engaging its creditors in good faith with a view to reaching a comprehensive debt restructuring programme that provides a fair and sustainable outcome for all stakeholders, the Finance Ministry adds.