Courtesy The Daily Mirror

COLOMBO (Daily Mirror) – Sri Lanka is expected to make further headway with regard to restructuring its foreign debt and securing the second tranche of the International Monetary Fund (IMF) loan, as the government has disclosed the terms of the US $ 4.2 billion debt deal with China Exim Bank to the country’s other creditors.

Central Bank Governor Dr. Nandalal Weerasinghe confirmed this key development to Bloomberg this week but refused to disclose the terms of the debt deal to the media.

In an interview with Bloomberg, Dr. Weerasinghe said he hopes the official creditors committee, which is led by Japan, India and the Paris Club of Nations, will move forward in agreeing
to restructure the island nation’s debt.

Following this, the IMF is expected to approve the release of US $ 330 million second tranche of the US $ 3 billion Extended Fund Facility before the end of the year.

Sri Lanka was successful in striking a debt deal with China Exit Bank this October. In a statement to the media, the Finance Ministry expressed confidence in the indicative terms agreed, providing the necessary fiscal space for Sri Lanka to implement its ambitious reform agenda.

While the development was welcome, concerns were raised by other creditors and the IMF on the lack of transparency surrounding the deal.

Sri Lanka’s official creditors’ committee is led by Japan, with the members being India and the Paris Club of Nations. China is not part of this committee.

Sri Lanka defaulted on its debt obligation in April 2022, after the country completely ran out of its reserves, primarily due to the mismanagement of the economy by the government of President Gotabaya Rajapaksa.