The Ministry of Finance, in an update on the discussion with the International Monetary Fund (IMF), said Sri Lankan authorities have substantial progress has been made during the talks on the fiscal, monetary and structural reforms necessary to stabilize the country’s economy.

In its statement, the ministry stated that Sri Lankan authorities have engaged in discussions with the IMF with a view to entering an Extended Financing Facility (EFF) to support Sri Lanka’s macroeconomic reform programme.

After the Spring Meetings with the IMF in April 2022, a virtual mission took place in early May, followed by an IMF mission to Colombo from 20th to 30th of June and discussions continued virtually with a view to reaching a Staff-Level Agreement (SLA).

“Substantial progress was made during discussion on the fiscal, monetary and structural reforms necessary to stabilize the economy.”

The statement pointed out that social unrest and political instability which led to several changes in administration since May delayed making a significant progress towards reaching an SLA.

“However, with the formation of the new government, technical discussion with Sri Lankan authorities and the IMF have now resumed with a view to finalizing the few remaining policy matters that need to be agreed upon prior to reaching an SLA. A Staff-Level Agreement would be an important milestone towards IMF Board approval for the EFF programme, which in turn would help unlock bridging finance to support much-needed external financing for Sri Lanka.”

At the same time, Sri Lankan authorities are working with debt restructuring advisors Lazard and Clifford Chance, to reach consensus on debt restructuring arrangement with creditors, the Finance Ministry said further.

According to the statement, the advisors have made considerable progress in the analytical framework for the debt operation, prior to formal engagements with the Sri Lanka’s creditors.

“The government is committed to engaging its creditors in good faith with a view to reaching a comprehensive debt restructuring programme that provides a fair and sustainable outcome for all stakeholders.”