Sri Lanka likely to qualify for bilateral debt relief

• WB, IMF request all creditors to suspend debt repayment from IDA countries
• SL in transition from IDA to IBRD status; likely to qualify for debt relief

Sri Lanka is likely to qualify for bi-lateral debt relief as the World Bank Group (WBG) and the International Monetary Fund (IMF) on Wednesday in a statement to the G20 called on official creditors to suspend debt repayment from IDA countries to help them fight COVID-19.

“With immediate effect—and consistent with national laws of the creditor countries—the World Bank Group (WBG) and the International Monetary Fund (IMF) call on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance,” the joint statement said. 

This will help with IDA countries’ immediate liquidity needs to tackle challenges posed by the coronavirus outbreak and allow time for an assessment of the crisis impact and financing needs for each country,” it added.

Although Sri Lanka graduated from IDA status to IBRD status in 2017 along with Bolivia and Vietnam, the country is still in transition period and hence is likely to qualify for this debt relief.

President Gotabaya Rajapaksa on Wednesday requested from World Health Organization’s (WHO) Director General to request multi-lateral and bilateral lending agencies to provide debt moratorium or debt deferment to all vulnerable developing nations to manage the impact of COVID-19.

“We invite G20 leaders to task the WBG and the IMF to make these assessments, including identifying the countries with unsustainable debt situations, and to prepare a proposal for comprehensive action by official bilateral creditors to address both the financing and debt relief needs of IDA countries,” the WBG-IMF joint statement said.

The two agencies will seek endorsement for the proposal at the Development Committee during the Spring Meetings scheduled to be held on April 16 and 17.