“SL progressing with bi-lateral creditors on debt restructuring”

Sri Lanka has made progress in discussions with bi-lateral creditors on debt restructuring, Central Bank Governor Dr Nandala Weerasinghe said.

The Governor noted that Sri Lanka has had two meetings with creditors on a transparent and comparable basis.

“China, a leading creditor to Sri Lanka is obviously a little late to come into the process owing to its internal issues, in particular Covid related lockdowns, ” he said. Noting that Sri Lanka missed the November target to get the reassurance from the bi-lateral creditors, he expressed optimism that Sri Lanka should be able to get financial assurance from China shortly and is looking at the IMF board meeting next year.

Noting that Sri Lanka is gradually getting back to normalcy,Dr. Weerasinghe said once Sri Lanka gets the IMF Programme on board, the complete debt restricting process will commence.

Speaking on potential funding lines that can be opened up in the backdrop of the IMF Extended Fund Facility programme, the Governor said the IMF Fund facility this time comes as a budget support not for addressing the balance of payments issue. Prior to this, the Governor explained that previous programmes of the IMF to Sri Lanka were available for building up reserves at the Central Bank. Once the IMF programme is finalized, the Asian Development Bank and the World Bank is looking at providing assistance in terms of reforms and policy based lending.

With the expected finance assurance from these lending agencies, the Governor expressed hope that the balance of payment gap can be mitigated whilst building up reserves through other sources of funding lines.