ECONOMYNEXT – The approval for $2.9 billion International Monetary Fund (IMF) loan is delayed to beyond the earlier expected January 2023 due to a complex debt restructuring negotiations with the island nation’s bilateral creditors, State Finance Minister Shehan Semasinghe said.
Sri Lankan officials earlier said the country was likely to get the IMF approval for the loan before end 2022 and then said it is likely to be by January 2023. The timing of the IMF approval is crucial for Sri Lanka to gradually improve its credit rating and go for international capital market for dollar borrowing.
“We are trying our level best to get the approval by the first quarter of next year,” Minister Semasinghe told EconomyNext.
“We have fulfilled all the prior action from the government side and the delay is mainly due to dragging negotiations with bilateral creditors. It’s a complex process.”
“We have held three negotiations with the bilateral creditors and they have asked some more clarifications. We will get the assurance from the creditors for sure. But we do not know the exact timing.”
Since Sri Lanka declared sovereign debt default in April this year, the island nation has stopped repaying all its bilateral creditors as it had no foreign currency and nobody was willing to help it.
The IMF has pledged to help with a $2.9 billion loan, provided Sri Lanka gets debt restructuring assurances from all its bilateral creditors and implementing some long delayed reforms.
“Bilateral creditors have not officially informed us anything on debt restructuring. The Paris Club has expressed their willingness to help us, but there is no official communication on that so far,” he said.
“The negotiations are going on.” (Colombo/Dec21/2022)