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IMF decision on ISB restructuring framework expected soon

IMF decision on ISB restructuring framework expected soon

28 Jul 2024 | By Shenal Fernando


  • Fin. Min. anticipates IMF compliance review of ISB restructuring framework in coming days
  • Agreement with Ad Hoc Group of Bondholders awaits IMF, OCC endorsements
  • Proposed framework includes 28% haircut on ISB face value and 11% past interest reduction


The Ministry of Finance expects the International Monetary Fund (IMF) to inform over the next few days whether the framework Sri Lanka had agreed upon with its International Sovereign Bond (ISB) holders is in compliance with the parameters of the IMF programme.

Speaking to The Sunday Morning Business, Treasury Deputy Secretary R.M.P. Rathnayake stated that in early July, the Government had managed to strike a deal with the Ad Hoc Group of Bondholders on a framework for restructuring Sri Lanka’s ISBs. 

He added that this framework had thereafter been submitted to the IMF to assess whether it was in line with the fund’s Debt Sustainability Analysis for Sri Lanka.

Elaborating further, he stated that what was required was not the approval of the Executive Board of the IMF but rather the approval of officials of the fund that the deal that had been struck was in compliance with the parameters of the IMF programme.

Commenting on the possible timeline for the receipt of the IMF decision, he stated: “We expect them to communicate their decision on whether we are in compliance within the next few days.”

Rathnayake stated that before Sri Lanka entered into any agreement with the Ad Hoc Group of Bondholders, the country would have to also obtain the endorsement of the Official Creditor Committee (OCC) that the terms of the proposed framework were in compliance with the principle of comparability of treatment. 

Earlier this month, the Government announced that it had reached an agreement with the Ad Hoc Group of Bondholders on the core financial terms of restructuring the ISBs, which are now embodied in a joint working debt treatment framework (the Joint Working Framework). 

The framework proposes a 28% haircut on the face value and an 11% reduction on past interest, with interest payments payable from September.




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