(Reuters) – The International Monetary Fund (IMF) is ready to aid Sri Lanka in its discussions with international bondholders, stating that it will provide an official assessment once both parties reach a tentative agreement-in-principle, according to an IMF spokesperson on Thursday.
“We anticipate that an agreement in line with the IMF-supported program and the Comparability of Treatment requirements of official creditors can be achieved soon, prior to completing the program’s second review,” the spokesperson mentioned.
Earlier this week, Sri Lanka announced that it was unable to reach a consensus with bondholders regarding the restructuring of approximately $12 billion in debt, raising concerns about a potential delay in the country’s receipt of the third tranche of its $2.9 billion IMF program scheduled for June.
The government cited a key obstacle as the “baseline parameters” of the bondholders’ proposal not aligning with those outlined in its IMF program.
“We urge both parties to continue their discussions promptly,” added the IMF statement.
Sri Lanka intends to consult with the IMF to evaluate whether the recent proposals discussed with bondholders fall within the parameters of its bailout program.
Having defaulted on its foreign debt in May 2022, Sri Lanka initiated negotiations with bilateral creditors several months later, ultimately reaching an agreement in principle with China, India, and the Paris Club in November.
The country has faced its most severe financial crisis since gaining independence from Britain in 1948, as its foreign exchange reserves plummeted to historic lows in early 2022, rendering it unable to afford essential commodities such as fuel, cooking gas, and medicine.
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