China's agreement with Sri Lanka did NOT impact IMF program - Mission Chief

COLOMBO (News 1st); The International Monetary Fund on Friday (20) said that the agreement reached between the government of Sri Lanka and the Exim Bank of China, did not have an impact on the IMF staff-level agreement on the first review of Sri Lanka's Extended Fund Facility arrangement.

IMF Senior Mission Chief for Sri Lanka Mr. Peter Breuer speaking to reporters said the staff-level agreement is the outcome of what was agreed between the IMF staff and the Sri Lankan authorities on a set of strong measures that will help achieve the objectives of the IMF-supported program, in various areas including revenue-based fiscal consolidation, strengthening social support to the poor and vulnerable, financial stability, debt sustainability, and so on.

He added that reaching debt sustainability is a separate track, and the authorities are engaged with their creditors in finding debt treatments that would help restore debt sustainability in line with the debt targets under the program.

Peter Breuer said the debt arrangements need to be moved forward for the IMF to be able to present the review to the IMF executive board. 

In mid-October 2023, the government of Sri Lanka announced that it had reached an agreement on the key principles and indicative terms of a debt treatment with the Export-Import Bank of China (“China Exim Bank”).

The agreement in principle covers approximately USD 4.2bn of outstanding debt.

China's Foreign Ministry Spokesperson Wang Wenbin speaking to reporters last week, said that since last year, China’s relevant financial institutions have been in close touch with Sri Lanka on the debt issue involving China, engaged in active bilateral consultations, and provided a financing support document to Sri Lanka in a timely manner to help it obtain loans from the IMF.