Timely debt restructuring crucial for Sri Lanka, says IMF
The HinduSri Lanka is showing “tentative signs of improvement”, the International Monetary Fund has said, while urging the island nation to reach timely restructuring agreements with its creditors, before the Fund’s first scheduled review in September this year. An IMF mission conducted a staff visit to Sri Lanka From May 11 to 23, to review the implementation of the Fund’s programme aimed at helping Sri Lanka achieve debt sustainability and revive its economy after last year’s economic crash, the worst the country has seen since Independence. Referring to discussions on progress in debt restructuring, the visiting officials noted: “Achieving timely restructuring agreements with creditors in line with the programme targets by the time of the first review is essential to restoring debt sustainability.” ‘Sharing the burden’ Earlier this month, a 17-member “creditor committee” for Sri Lanka, co-chaired by India, Japan and France, met to discuss Sri Lanka’s formal request for debt treatment. In a statement following the meeting, the committee stressed the need for Sri Lanka’s private creditors and other official bilateral creditors to provide a debt treatment plan on terms “at least as favourable as the ones agreed by this creditor committee, in line with the comparability of treatment principle.” While India and the Paris Club have repeatedly underlined creditor parity, China has demanded that private creditors — who hold the largest share of Sri Lanka’s debt — as well as multilateral lenders “share the burden” of a possible haircut.