ECONOMYNEXT –Sri Lanka still needs adequate assurances from other bilateral creditors for its program to be approved, the International Monetary Fund said, after Paris Club lenders said they will re-structure debt.

“We welcome the recent statement by the Paris Club to provide financing assurances to Sri Lanka following the assurances provided by India,” an IMF spokesperson said.

“Sri Lanka continues to engage with official bilateral creditors to obtain financing assurances and also continues to advance domestic reforms.

“As soon as adequate assurances are obtained and remaining requirements are met, including by the Sri Lankan authorities, the Extended Fund Facility (EFF) arrangement for Sri Lanka can be presented to the IMF’s Executive Board for approval that would unlock much needed external financing.”

Sri Lanka is still negotiating with China to get assurances on debt re-structure in line with the requirements of the IMF.

“We are in direct discussions with China,” President Ranil Wickremesinghe said in an address to a new session of Sri Lanka’s parliament earlier this week. “We have received positive responses from all parties. We are now working towards unifying the approaches of other countries and that of China.”

Sri Lanka has stabilized the external sector by the end of December 2022, using a peg at 360/370 to the US dollar with complementary monetary policy.From January 2023 some injections have been made amid pressure to bring down rates. The first quarter sees droughts and higher credit pressure on the banking system as the power utility imports more fuel due to less hydropower generating capacity.