The International Monetary Fund (IMF) states that Sri Lanka has made significant progress in implementing reforms, positioning it to advance quickly toward the third review of the Sri Lanka EFF programme, which is coming up soon.
Addressing the IMF’s special briefing on the Regional Economic Outlook for the Asia Pacific Department, Krishna Srinivasan said there was unanimous consensus that Sri Lanka, which was tearing at the abyss in 2022, has come a long way in terms of undertaking reforms which have led to some hard-won gains.
“You’ll note that growth has been positive in the last four quarters. Inflation is coming down. So there is consensus from the new government that it would like to safeguard and build on the hard-won gains under the programme,” Srinivasan said.
The following is a transcript of the Director of the IMF’s Asia and Pacific Department, Krishna Srinivasan’s comments on Sri Lanka related to the IMF’s Regional Economic Outlook for the Asia Pacific;
Sri Lanka’s EFF programme;
When the new government took office not too long ago, I led a high-level team to Colombo to discuss and engage with the authorities. And we had some very productive discussions with the new government and the team there. The discussions are continuing this week during the Annual Meetings.
I would say there was unanimous consensus that Sri Lanka, which was tearing at the abyss in 2022, has come a long way in terms of undertaking reforms which have led to some hard-won gains.
You’ll note that growth has been positive in the last four quarters. Inflation is coming down. So there is consensus that the new government would like to safeguard and build on the hard-won gains under the program.
Now, under the program, we have elements which address some of the priorities of the new government, including in terms of social protection and so on. But the details on the program are continuing and they’ll be happening this week in Washington. We are encouraged by what we have heard so far and hope that you know, we can move fast towards the third review which will come up soon.
Debt restructuring;
They have reached agreements with the official creditors, and they’ve reached an agreement in principle with the private creditors. The next step would be to reach a formal agreement with all creditors. And that’s a big step forward. And of course that’s not the end. There’s a lot more work to be done in terms of continuing with the reforms because it is a long way to go before you’re on the path of strong and sustainable recovery.
Macro-linked bonds;
This is something which is a negotiation between the country’s creditors, the country’s advisors and the creditors. We don’t get involved in the kind of instruments that they negotiate and so on and so forth. What we are concerned about is whether these instruments and the restructuring they reach are consistent with our program targets on debt and so on, and that there’s comparability of treatment across creditors. So that’s something which the country works on.
You’re right that these macro-linked bonds have become popular. And so, you know, it all depends, country to country, how the creditors and advisors go about it. So it’s not for me to say that this is going to be the future of all debt restructuring. It varies from country to country. We’ve seen plain vanilla bonds being exchanged and you have these kinds of bonds in other countries.
Specific tax measures;
I don’t want to go into the details because those are things being worked out in the context of discussions which are ongoing right now. Hopefully, we’ll move along these negotiations over the next few weeks in a more targeted way. (Newswire)
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