COLOMBO: Crisis-hit Sri Lanka must convince IMF officials that it has met key goals under a $2.9 billion bailout to push forward debt restructuring efforts crucial to a recovery for its battered economy.

The officials, set to arrive in Colombo on Thursday, will assess the island’s performance under a four-year program secured last March. Sri Lanka needs to meet the IMF’s performance criteria to unlock further bailout funds.

The country of 22 million suffered its first foreign debt default in May 2022, after a severe shortage of dollars triggered its worst financial crisis.

The IMF bailout programme has helped Sri Lanka to build up reserves, stem a fall in its currency and tame runaway inflation. As part of the terms of the bailout, the island has to secure assurances of debt restructuring from bondholders and key bilateral lenders including China, Japan and India.

Sri Lanka has asked foreign investors for a 30pc haircut to help restructure its debt and the negotiations, which started last Sept, are still ongoing.

Under a domestic debt restructuring announced in June Sri Lanka accepted offers to exchange about $10bn worth of defaulted local debt for new bonds, the Finance Ministry said

Published in Dawn, September 14th, 2023