Sri Lanka held crucial discussions with its international bondholders in Washington this week, aiming to accelerate its exit from default status, according to Central Bank Governor Nandalal Weerasinghe. These meetings were held alongside the IMF/World Bank sessions, signaling a renewed push to rebuild financial stability and improve Sri Lanka’s economic outlook.
Key Developments:
- Path to Debt Exchange: Following Sri Lanka’s 2022 default due to an economic crisis, the nation recently reached a preliminary agreement with creditors to restructure $12.5 billion in bonds. Citibank will act as the dealer manager, overseeing the consent solicitation required to finalize the debt exchange and guide the country out of default.
- IMF Program Review Update: While the IMF’s third program review has been delayed, discussions between the IMF and Sri Lankan authorities are ongoing to determine the review date. The IMF and bilateral creditors have already shown support for Sri Lanka’s debt restructuring proposal, further stabilizing the path forward.
- Economic Outlook: With ongoing reform implementation, Weerasinghe forecasts that Sri Lanka’s economy could see a growth rate of approximately 3% by 2025. This growth projection is contingent on the timely execution of economic reforms and successful completion of debt restructuring.
The debt exchange efforts and reform momentum reflect Sri Lanka’s commitment to overcoming financial challenges, with international support as a significant driver. The road to recovery, though demanding, holds promise as Sri Lanka focuses on securing economic stability and sustainable growth.
Source: Reuters
Central Bank of Sri Lanka (CBSL)
Last modified: October 28, 2024
