Sri Lanka to use second IMF tranche to settle outstanding credit, says finance minister

Sri Lanka would utilise IMF’s second tranche of bailout deal to settle arrears owed to multilateral creditors while expediting debt restructuring process, state minister of finance Shehan Semasinghe has said.

Sri Lanka is now in a position to receive second tranche of USD 330 million upon approval of Staff-Level Agreement by IMF Executive Board.

Staff-Level Agreement will enable World Bank, Asian Development Bank, and or multilateral financial institutions to make remaining payments, furr expediting debt restructuring efforts with international partners, Semasinghe said in a statement on Friday.

IMF h, in March this year, approved a 48-month, USD 2.9 billion extended arrangement under Extended Fund Facility (EFF) to support Sri Lanka’s economic policies and reforms.

It said, despite showing early signs of stabilisation, full economic recovery was not yet assured.

Sri Lanka’s external position h weakened as a result of prolonged debt restructuring discussions and reserve accumulation has slowed in recent months.

Sri Lanka needed to increase revenues and signal better governance by opting needed tax measures.

IMF said it wanted to be sure that debt sustainability is being restored in Sri Lanka. debt targets h been set in IMF programme when it started in March. targets involved debt stock, with respect to debt service in domestic and in foreign currency and also with respect to debt relief that is needed within programme period, IMF stated on Friday.