Sri Lanka is in a bit of a financial pickle, according to what I’ve gathered. The International Monetary Fund (IMF) is involved, and this guy named Peter Breuer thinks the country needs to make deals with its official and private creditors. They’re trying to work things out before the second review of something called the Extended Fund Facility (EFF), which is set to wrap up by the end of the first half of next year.
The Daily Mirror, a newspaper in Sri Lanka, reported that Breuer is saying the agreements they’ve made in principle with creditors need to become real agreements before this second review happens. The IMF team is planning to visit Colombo from March to April next year, and they aim to finish this review by June.
Sri Lanka has already made some in-principle deals with the Official Creditor Committee (OCC), led by France, China, and Bharat, as well as with the Exim Bank of China. But here’s the kicker—no deal has been struck yet with the commercial creditors or bondholders. Apparently, Sri Lanka turned down a proposal from the bondholders to restructure debt based on GDP growth. Not sure why, but they didn’t like it.
In September, the IMF said things are still shaky in Sri Lanka. The economy isn’t fully recovered, and growth is kinda slow. In the second quarter, the real GDP actually shrank by 3.1% compared to the previous year. Economic indicators are all over the place, and the country’s reserve accumulation has slowed down recently.
Peter Breuer, along with someone named Katsiaryna Svirydzenka, led an IMF team that visited Colombo from September 14-27. They mentioned that Sri Lanka has been making progress with reforms, but despite some signs of improvement, a full economic recovery isn’t guaranteed yet. Tough times for Sri Lanka, it seems.
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