ECONOMYNEXT – Sri Lanka is expecting to wrap up a staff level agreement with the International Monetary Fund (IMF) when a team visits the country at the end of August, Central Bank Governor Nandalal Weerasinghe said.
“The IMF mission is coming to Sri Lanka by the end of the month with the intention of reaching staff level agreement on the policy package.
“We are making good progress with the IMF mission and we’re hoping to reach staff level agreement,” Weerasinghe said at a monthly policy review meeting held on Thursday August 18.
“We have achieved our policy level targets so we hope to reach staff level agreement. This will certainly improve our situation,” he said.
At the moment, the Central Bank is in the process analysing its creditors before it reaches out to them.
“Once the staff level agreements with the IMF are concluded, the country hopes to reach out to its external creditors. Once the IMF agreements are in place, we will reach out to all our bilateral and commercial creditors,” he said.
Weerasinghe said a staff level agreement with the IMF will give the country a “clear picture on debt sustainability and debt targets for the country to achieve in the next 10 years and an overall macro-fiscal programme.”
He said using these programmes endorsed by the IMF they will be able to reach out to the external creditors including first party commercial creditors and International Sovereign Bond (ISB) holders, the Paris club including Japan (which is a major partner of the Paris club) and non-Paris club creditors like China and India.
“All [creditors] will be officially approached and we will present our overall macro programme that has been endorsed by the IMF and also the debt targets we have to achieve going forward.
“So, with that information we will approach different groups and the process will commence from there with the assistance of France-based Lazard and Clifford Chance legal advisors as well as the other agents.”
Weerasinghe said the government is confident that debt can be made sustainable without restructuring domestic debt.