Sri Lanka’s talks with creditors ongoing, unaware of specific deals – IMF

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Discussions between Sri Lanka and all its creditors are ongoing, though the International Monetary Fund has not been informed about any specific agreements, its mission chief for the country said on Wednesday.

“We will need to assess the entire package of agreements in its totality to assess consistency with IMF debt targets,” Peter Breuer told Reuters on the sidelines of the World Bank IMF annual meetings in Marrakech.

Sri Lanka, mired in its worst economic crisis in 70 years, is in debt restructuring talks with a range of creditors, including China, its largest single creditor. Colombo suspended debt repayments in May 2022.

China’s Foreign Ministry said on Tuesday that the Export-Import Bank of China reached a preliminary deal on the disposal of China-related debts, but did not share further details.

Sri Lanka owed EXIM $4.1 billion, or 11% of the country’s foreign currency debt, as of the end of 2022.

Sri Lanka is also in talks with IMF over a $2.9 billion bailout. But in September the fund declined to release a second tranche of around $330 million after it failed to reach a staff-level agreement over concerns of a possible government revenue shortfall.

Other bilateral creditors of Sri Lanka including the Paris Club, Japan and India are expected to make an announcement on a deal during the IMF meetings a source with direct knowledge of the talks told Reuters.

Japan, India and France announced in April a common platform for talks among bilateral creditors to coordinate restructuring of Sri Lanka’s debt, a move they hope would serve as a model for solving the debt woes of middle-income economies.

As a middle-income country, Sri Lanka is not part of the G20 debt initiative known as the Common Framework, so talks with official creditors from China are conducted separately.