Sri Lanka claims to have reached an understanding with the Export-Import Bank of China (Exim Bank) on the fundamental ideas and general parameters of a debt treatment.
The agreement in principle, according to a news release issued by the Ministry of Finance, Economic Stabilisation & National Policies on Wednesday, Oct. 11, covers roughly USD 4.2 billion in outstanding debt.
The agreement, according to the government, is an important step in restoring Sri Lanka’s long-term financial sustainability and will open the door to a rapid economic recovery.
The suggested parameters reached are anticipated to give Sri Lanka the fiscal breathing room it needs to carry out its ambitious reform plan.
In achieving this agreement in principle, which reflects a shared commitment in line with the goal/objective of restoring public debt sustainability commensurate with the IMF-supported programme, Sri Lanka welcomed the involvement and ongoing support of China Exim Bank.
Authorities in Sri Lanka are hoping that this historic accomplishment would act as a compass for their ongoing discussions with the Official Creditor Committee and commercial creditors, including bondholders.
Additionally, it should make it easier for the IMF Executive Board to approve the first review of the IMF-supported programme in the upcoming weeks, enabling the release of the next tranche of IMF financing worth around USD 334 million.
