Sri Lanka must reach timely restructuring agreements - IMF

Sri Lanka is showing “tentative signs of improvement”, the International Monetary Fund has said, while urging the island nation to reach timely restructuring agreements with its creditors, before the Fund’s first scheduled review in September this year.

An IMF mission conducted a staff visit to Sri Lanka From May 11 to 23, to review the implementation of the Fund’s programme aimed at helping Sri Lanka achieve debt sustainability and revive its economy after last year’s economic crash, the worst the country has seen since Independence.

In March 2023, the IMF cleared a nearly $3 billion-dollar package for Sri Lanka, asking the country to “step up structural reforms”.

The visiting delegation said in a statement that following strong policy efforts, the macroeconomic situation in Sri Lanka is showing tentative signs of improvement, with inflation moderating, the exchange rate stabilising, and the Central Bank rebuilding reserves buffers. 

However, the overall macroeconomic and policy environment remains challenging.

Referring to discussions on progress in debt restructuring, the visiting officials noted that achieving timely restructuring agreements with creditors in line with the programme targets by the time of the first review is essential to restoring debt sustainability.