• Says discussions between Sri Lanka and all its creditors ongoing

The International Monetary Fund (IMF) yesterday said it had not been informed of any specifics of a debt

restructuring deal that is believed to have been entered into between Sri Lanka and Export-Import Bank (Exim Bank) of China. 

China’s Foreign Ministry this week said Exim Bank of China had reached a preliminary deal with the Sri Lankan authorities pertaining to the China-related debts but did not share details.

However, IMF Senior Mission Chief for Sri Lanka Peter Breuer said the IMF had not been informed about any specific agreements.

“We know discussions between Sri Lanka and all its creditors have been ongoing. We have not yet been informed about any specific agreements. We will need to assess the entire package of agreements in its totality to assess consistency with the IMF debt targets,” Breuer said.

Sri Lanka last month successfully completed a domestic debt restructuring programme. Under that, the authorities were able to exchange about Rs.10 billion worth of defaulted local debt into long-term new bonds, out of the US $ 27 billion eligible debt.

The domestic restructuring is expected to pave the way for the foreign debt negotiations.

According to the Finance Ministry, Sri Lanka’s total foreign debt, as at end-March 2023, was Rs.36.4 billion.

As per the IMF debt sustainability targets, Sri Lanka plans to reduce its overall debt by almost US $ 17 billion.  Sri Lanka is asking for a 30 percent haircut from its foreign creditors

Out of that, US $ 11.3 billion was bilateral debt and US $ 10.3 billion was multilateral debt owed to institutions like the World Bank and Asian Development Fund. Little over US $ 14.7 billion was commercial debt, consisting mainly of sovereign bonds.

As at end-March 2023, Sri Lanka owed US $ 4.7 billion to China, US $ 1.74 billion to India and US $ 2.68 billion to Japan, which is a member of the Paris Club. 

Additionally, Sri Lanka had outstanding debt of US $ 5.65 billion with the Asian Development Bank and owed US $ 3.88 billion to the World Bank.

Meanwhile, Sri Lanka failed to secure a staff-level agreement with the IMF staff mission, who visited Sri Lanka last month, due to a slip in government revenue and the failure to reach a deal with the country’s foreign creditors to finalise a debt treatment deal.

The staff deal followed by the IMF board approval will enable the disbursement of the second tranche of the US $ 3 billion Extended Fund Facility, which will amount to US $ 330 million.