Sri Lanka Gets Initial Approval for $337 Million IMF Tranche as the country works to finish its debt restructuring.
To finish its debt restructuring, Sri Lanka was granted preliminary permission for the next loan tranche under a $3 billion IMF rescue package.
The country may get a payout of roughly $337 million under the terms of the staff-level agreement for the second review of the program, the Washington-based lender said in a statement. However, this is contingent upon confirmation by the IMF executive board.
The statement states that adequate progress on debt restructuring, fulfillment of finance assurances, and implementation of previous initiatives are all prerequisites for funding. Reporters in Colombo were informed on Thursday by senior mission chief Peter Breuer that some changes are still in progress and that the IMF is closely watching the Public Finance Management Bill’s implementation.
Sri Lanka, a South Asian country with approximately $7 billion in external finance needs this year, is still dependent on IMF aid nearly two years after it entered a historic sovereign default. Restoring growth to the economy, which has been severely impacted by the pandemic and debt crisis, depends on the IMF lifeline.
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“Sustaining the reform momentum is critical to put the economy on a path towards lasting recovery and stable and inclusive economic growth,” the IMF said.
Regarding Sri Lanka, investors are upbeat as the country’s currency is getting close to its highest level since June and dollar bonds are among the best-performing in Asia, having gained almost 9% this year.
According to indicative pricing published by Bloomberg, dollar bonds maturing in 2030 continued their early gains, rising 1.9 cents to 56.6 cents on the dollar, the most since November 2021. There was an additional gain on notes maturing in 2027, 2028, and 2029.
Next week, investors and Sri Lankan officials are anticipated to begin talks aimed at restructuring $12 billion in foreign bonds that have defaulted. In an earlier statement from March, President Ranil Wickremesinghe stated that the country is making headway toward release from payments through 2027.
India, China, and the Paris Club are among the official creditors with whom Sri Lanka has already reached an early restructuring agreement. A deal with the China Development Bank still has to be finalized.