{"id":128868,"date":"2022-09-29T16:45:56","date_gmt":"2022-09-29T23:45:56","guid":{"rendered":"https:\/\/www.lankaweb.com\/news\/items\/?p=128868"},"modified":"2022-09-29T16:45:56","modified_gmt":"2022-09-29T23:45:56","slug":"imf-says-timeline-remains-uncertain-as-sri-lanka-eyes-december-bailout","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2022\/09\/29\/imf-says-timeline-remains-uncertain-as-sri-lanka-eyes-december-bailout\/","title":{"rendered":"IMF says timeline remains uncertain as Sri Lanka eyes December bailout"},"content":{"rendered":"<h2><span style=\"color: #0000ff;\"><em>Courtesy Adaderana<\/em><\/span><\/h2>\n\n\n<p>Sri Lanka\u2019s government appears increasingly upbeat about its chances of receiving International Monetary Fund (IMF) board approval for a USD 2.9 billion bailout by December, but the multilateral lender has cautioned that the time frame remains uncertain, and much depends on discussions with the heavily indebted country\u2019s creditors.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"IMF says timeline remains uncertain as Sri Lanka eyes December bailout (English)\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/qOUpWAJ69to?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>Peter Breuer, senior mission chief for Sri Lanka, and Masahiro Nozaki, mission chief for Sri Lanka, in written comments to Nikkei Asia, said, It is difficult to predict the timeline, as the process of debt relief discussions takes time. All parties who are involved in the process should move expeditiously, so that Sri Lanka can emerge from the crisis as quickly as possible.\u201d<\/p>\n\n\n\n<p>On Sept. 1, Sri Lanka reached a staff-level agreement with the IMF to obtain the $2.9 billion, a crucial lifeline for a country wrestling with the worst economic crisis in its history. The country\u2019s year-on-year inflation topped 70% in August, and the public continues to face severe shortages of essentials.<\/p>\n\n\n\n<p>Earlier this year, Sri Lanka defaulted on a foreign bond for the first time, after its foreign reserves dwindled to next to nothing. We announced that we are not in a position to pay,\u201d central bank Gov. Nandalal Weerasinghe said in May, confirming the pre-emptive default.\u201d<\/p>\n\n\n\n<p>Our position is very clear. Until [the lenders] come and restructure, we can\u2019t pay,\u201d Weerasinghe said.<\/p>\n\n\n\n<p>Last Friday, Sri Lanka\u2019s Finance Ministry held an online presentation for external creditors to explain the situation and discuss the next steps toward restructuring. A handout cited some past policy mistakes\u201d along with the COVID-19 pandemic and the resulting crisis as key factors that crippled the economy, depleted reserves and forced the country to stop debt repayments.<\/p>\n\n\n\n<p>The day before, President Ranil Wickremesinghe chaired a meeting with ambassadors from 23 Paris Club and non-Paris Club countries, including Japan, France and India, to discuss related matters.<\/p>\n\n\n\n<p>Wickremesinghe appealed to all creditor countries to offer the financing assurances\u201d on debt sustainability the IMF has said are essential for the board to give the final green light.<\/p>\n\n\n\n<p>The Indian High Commission in Sri Lanka, for its part, expressed support even before the creditor briefings. On Sept. 20 it said that it had started discussions on restructuring Sri Lanka\u2019s official debt to India. A spokesman told Nikkei Asia that the cordial atmosphere\u201d of the talks reflected New Delhi\u2019s support for an early conclusion and approval of a suitable IMF program.\u201d<\/p>\n\n\n\n<p>Noting the need for other creditors to work on ensuring Sri Lanka\u2019s debt is manageable, he added that India would remain closely engaged\u201d with relevant stakeholders.<\/p>\n\n\n\n<p>During last Friday\u2019s presentation, Weerasinghe and Mahinda Siriwardana, secretary to the Treasury and Ministry of Finance, noted that as of the end of June, Sri Lanka\u2019s public debt stood at 122% of gross domestic product. A figure equivalent to 70% of GDP was denominated in foreign currency.<\/p>\n\n\n\n<p>According to the presentation by the Ministry of Finance and the central bank, China, Japan and India were the country\u2019s top three bilateral creditors, with China accounting for 52% in total, followed by Japan at 19.5% and India at 12%.<\/p>\n\n\n\n<p>The Sri Lankan officials also pushed for the formation of an ad-hoc coordination group to expedite the process of obtaining financing assurances from multiple creditors. They explained that such a group would allow official bilateral creditors to give such assurances to the IMF collectively, after discussing the matter among themselves.<\/p>\n\n\n\n<p>The Japanese Embassy in Colombo agreed that it is essential for all creditors to come to the table for debt restructuring discussions to ensure that the process is transparent and fair. If all the creditor countries will participate in a coordination platform proposed by President Wickremesinghe, the government of Japan is ready to contribute to the discussion in a constructive way,\u201d the embassy told Nikkei Asia.<\/p>\n\n\n\n<p>But all eyes are on top creditor China, known for its preference for refinancing loans or deferring repayments rather than restructuring and settling for loss-making haircuts.\u201d<\/p>\n\n\n\n<p>On the sidelines of the United Nations General Assembly last week, Sri Lankan Foreign Minister Ali Sabry met his Chinese counterpart, Wang Yi, who pledged China\u2019s support for a Sri Lankan economic recovery.<\/p>\n\n\n\n<p>A Chinese Foreign Ministry readout of the meeting said that Wang promised China is ready to work with Sri Lanka to carry forward the traditional friendship, consolidate strategic mutual trust and deepen and expand pragmatic cooperation.\u201d He also said that China would continue to offer assistance within our capacity to help Sri Lanka overcome temporary difficulties.\u201d<\/p>\n\n\n\n<p>Still, a highly placed Sri Lankan diplomatic source said that although debt discussions have started with some countries, it is impossible\u201d to say how long they will take and when a final decision will be made.<\/p>\n\n\n\n<p><em><strong>Source: Nikkei Asia<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Courtesy Adaderana Sri Lanka\u2019s government appears increasingly upbeat about its chances of receiving International Monetary Fund (IMF) board approval for a USD 2.9 billion bailout by December, but the multilateral lender has cautioned that the time frame remains uncertain, and much depends on discussions with the heavily indebted country\u2019s creditors. Peter Breuer, senior mission chief [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[193],"tags":[],"class_list":["post-128868","post","type-post","status-publish","format-standard","hentry","category-imf-bailout-package"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/128868","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=128868"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/128868\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=128868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=128868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=128868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}