The International Monetary Fund says that sustaining reform momentum is critical for Sri Lanka.
Julie Kozack, director of the IMF Communications Department, said so in response to questions raised by the media.
She said program performance is strong, and reform efforts are bearing fruit in terms of reviving economic growth, lowering inflation, boosting reserves and improving revenue mobilization.
“However, as we have said before, important vulnerabilities and uncertainties do remain, and this means that sustaining reform momentum is critical,” added Kozack.
QUESTIONER: In terms of the program of Sri Lanka right now -- oh, hi. Thanks. In terms of the program, the current program, what revisions does the IMF expect the new president administration to make to that program? And is it possible to revisit some of the parameters without breaching some of the debt sustainability framework that some of these bondholder agreements are on? And then also on the bondholder and some of those other agreements, particularly the bondholder, the new one, is there an update on whether or not it meets the comparability of treatment expectations with the OCC deal? And as I mentioned, I am sure there's some other Sri Lanka questions floating around.
MS. KOZACK: Anything else on Sri Lanka? I see nothing in the room online on Sri Lanka.
QUESTIONER: Good morning, Julie. I've got two questions regarding Sri Lanka. That is, number one, is Sri Lanka recently elected its new president, and now the president has also declared the 14th of November as the parliamentary elections. Now Sri Lanka is facing kind of an impasse where you have one faction saying that they will go ahead with the IMF program while another faction contesting the upcoming polls wants to change the IMF program. Given this situation, is there any possibility of sticking with the program or is the review going to change or is the deadline, I mean, the program review going to be pushed back? And at the same time, the new government has also introduced new concessions to the general public. Was the IMF consulted in this regard?
QUESTIONER: Also, on Sri Lanka. I'm just wondering if you have a date for engagement with the new government? Do you anticipate meeting with leaders of the country? Do you expect them to attend the Annual Meetings this month? Thanks.
MS. KOZACK: So, let me take these as a group. So first, just stepping back to remind on June 12th, 2024, the IMF Executive Board completed the 2024 Article IV Consultation, and the Second Review under the EFF program was Sri Lanka, providing the country with immediate access to about $336 million to support its economic policies and reforms. Program performance is strong, and reform efforts are bearing fruit in terms of reviving economic growth, lowering inflation, boosting reserves and improving revenue mobilization. However, as we have said before, important vulnerabilities and uncertainties do remain, and this means that sustaining reform momentum is critical.
Right now, a high-level team led by our Director of the Asia Pacific Department, Krishna Srinivasan, is currently visiting Colombo to meet with President Dissanayake and his new economic team. The delegation is discussing with the authorities the latest economic developments and their economic reform objective. Dates for the Third Review under the EFF will be announced in due course and this delegation will communicate when their visit concludes. And we will have more information for you at that time.
On the question on the bondholders, what I can say is that on September 18th, Sri Lanka and the international bondholder representatives reached an agreement in principle subject to confirmation of comparability of treatment by Sri Lanka's Official Creditor Committee, and this does represent some significant progress in Sri Lanka's debt restructuring process.
