IMF reiterates prior actions Sri Lanka must take to approve funds

IMF reiterates prior actions Sri Lanka must take to approve funds

The International Monetary Fund (IMF) has reiterated the prior actions Sri Lanka must take for the IMF board to approve the disbursement of funds.

Deputy Director, Asia and Pacific Department at the International Monetary Fund, Anne-Marie Gulde, said that the conditions involve securing assurances from bilateral creditors and dealing with the private sector debt.

“Sri Lanka is facing a very severe economic crisis. And let me start by saying that we are very concerned about what’s going on in Sri Lanka. And we all hope that we will be able to work very fast to end the suffering, especially the suffering of the poor and vulnerable. We have reached a staff level agreement on a four-year EFF program on September 1 of this year,” Anne-Marie Gulde said.

She said that the initial disbursement of the program will only come after the IMF board meeting.

“Sri Lanka’s debt is assessed as unsustainable at this stage. And for the board to approve, we will need two specific financing assurances. The first would be from official bilateral creditors, we would need assurances that they will restore debt sustainability in the context of the program. And we need assurances that there are good faith efforts underway to deal with the private sector debt. So, Sri Lanka is currently working with their legal and financial advisors on this debt element,” she said.

Anne-Marie Gulde also said that it will be difficult to predict a timeline because the process of debt negotiations is taking time.

“And with what we see from different countries that went through the process, these timelines differ depending on what — who the creditors are and what is involved. We certainly are supporting the process as much as we can. And we hope that everybody can work expeditiously to get a process underway, and discussions are — have been starting, including with support of all bilateral creditors that are involved,” Anne-Marie Gulde said.

She said the IMF is working very closely with the World Bank, the Asian Development Bank, the Asian Investment Bank, on programs for Sri Lanka.

“Those programs would help for closing the financing gap. But I want to say also very importantly that the policies under the other multilateral lenders in their areas of expertise will be important to resolve Sri Lanka’s longer term growth problems,” she said.

Responding to a question on a possible downgrade of Sri Lanka, Anne-Marie Gulde said that Sri Lanka is a middle-income country and remains a middle-income country even with the decline in GDP. (Colombo Gazette)

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