• Documents on Sri Lanka’s facility to the fund this week
• Positive response from China, IMF MD tells President
• Govt. expects another positive letter from China on debt

The Executive Board of the International Monetary Fund (IMF) is to meet on the 20th of this month and the proposed financial facility for Sri Lanka is likely to be taken up for discussion and decision that day, The Sunday Morning learns.

A highly-placed Government source told The Sunday Morning that all documents pertaining to Sri Lanka’s proposed Extended Fund Facility (EFF) programme would be sent to the IMF this week to be taken up at the Executive Board meeting on the 20th. 

“Everything has been done and all the documents will be sent to the IMF,” the source noted.

When questioned whether there had been a change with regard to China’s stance on Sri Lanka’s debt restructuring programme, the source noted that there had been a positive response from China and that the debt restructuring issue would also be resolved.

“The IMF Managing Director (MD), during her discussion a few days back with President Ranil Wickremesinghe, had conveyed that her (MD’s) discussion with the Chinese Premier had been very positive and that China had responded positively towards finalising Sri Lanka’s debt restructuring programme,” the source further noted.

IMF MD Kristalina Georgieva and Wickremesinghe last week held a discussion via Zoom on the proposed EFF for Sri Lanka and the country’s debt restructuring programme.

Bloomberg reported last week that China’s Premier Li Keqiang had told the Head of the IMF that China was open to participating in multilateral efforts to help heavily-indebted nations “in a constructive manner,” China Central Television (CCTV) reported. 

“China is willing to take part in resolving relevant countries’ debt issues,” Li had said in a phone call Wednesday (1) with IMF Managing Director Georgieva, according to CCTV. 

“China maintains that all sides should take joint action and share an equitable burden,” he had said.

It is also learnt that Sri Lanka is expecting another positive note from China on Sri Lanka’s debt restructuring programme. 

China has so far officially offered Sri Lanka a two-year debt moratorium, which the IMF has maintained is insufficient to proceed with the EFF for Sri Lanka.

Meanwhile, the G20 finance ministers and central bank governors who met in Bengaluru, India from 24-25 February said that they looked forward to a swift resolution to Sri Lanka’s debt situation.

The IMF last week issued several statements commending the actions taken by the Sri Lankan Government and Central Bank of Sri Lanka (CBSL) to resolve the country’s worst-ever economic crisis.

The IMF has justified the Government’s tax reforms, stating they are needed to correct imbalances in tax revenue and expenditure.

The new tax rate schedule for personal income tax helps to meet the set objectives and regain confidence of creditors, the IMF Mission to Sri Lanka stated.

The IMF also noted that the CBSL’s decision to raise the policy rate was in line with its objective set under the inflation targeting framework. 

The fund further stated that it reflected the CBSL’s commitment to the inflation target and was an important part of the disinflation strategy in the EFF programme.