IMF ready to assist Lanka in bondholder talks amid debt restructuring challenges

The International Monetary Fund (IMF) has expressed its readiness to assist Sri Lanka in its negotiations with international bondholders, according to a Reuters report. An IMF spokesperson has been quoted as saying that a formal assessment will be provided once a preliminary agreement is reached.

The spokesperson has expressed hope that an agreement aligning with the IMF-supported programme and the Comparability of Treatment requirements from official creditors would be finalised soon. This development is crucial for completing the second review under the programme.

Earlier this week, Sri Lanka disclosed its failure to secure a deal with bondholders for restructuring approximately 12 billion US dollars of debt. This setback has sparked concerns about potential delays in receiving the third instalment of its IMF programme scheduled for June.

The Sri Lankan government highlighted that a major impediment was the discrepancy between the bondholders’ plan and the baseline parameters set by its IMF programme.

In March 2023, the IMF approved a 48-month extended arrangement under the Extended Fund Facility (EFF), providing about $3 billion to support Sri Lanka’s economic policies and reforms.