There is a strong expectation that Sri Lanka will reach agreements with its commercial creditors, consistent with programme parameters, by completion of the second review, International Monetary Fund Communications Director Julie Kozack said on Thursday, addressing a press conference in Washington.

She said that on December 12, 2023, the IMF’s Executive Board approved the first review of Sri Lanka’s programme with the IMF. It enabled a disbursement of 337 million U.S dollars. And on March 21, the IMF Staff and the Sri Lankan authorities reached a Staff-Level Agreement on economic policies to conclude the second review, as well as the 2024 Article IV Consultation.

“Completion of the review by the Executive Board requires, first, the implementation of the prior actions that have been agreed and second, completion of, what we call, financing assurances review. That review would need to confirm that multilateral partners are continuing their financing contributions to Sri Lanka, and it will also assess progress with debt restructuring, and it will need to conclude that adequate progress is being made,” Kozack said.

The IMF Communications Director said the macroeconomic policy reforms in Sri Lanka are starting to bear fruit. Commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth, while preserving stability of the financial system. Public finances have strengthened following substantial fiscal reforms, and it is critical that this reform momentum be continued, she said.

Kozack said the next steps on the debt restructuring are to conclude the negotiations with external commercial creditors and to implement agreements in principle with official creditors.

“The domestic debt operations, you know, part of the debt restructuring, are largely completed, and there is a strong expectation that agreements with commercial creditors consistent with programme parameters will be reached by completion of the second review,” she said.