- Expects final resolution with private creditors in early 2024
- Foresees debt resolution as catalyst for economic resurgence
- IMF approval signals Sri Lanka’s strides toward fiscal stability
- Disbursement bolsters path to debt resolution with private creditors
The State Minister of Finance anticipates that ratings agencies will review Sri Lanka’s sovereign ratings once the country reaches a final resolution with its private sovereign creditors, which he expects to be completed in early 2024.
Speaking to The Sunday Morning Business, State Minister of Finance Shehan Semasinghe revealed that rating agencies were mainly focused on Sri Lanka’s debt restructuring process and that a sovereign rating upgrade would follow once the country reached a final resolution with its external sovereign creditors.
He expressed confidence that Sri Lanka would be able to reach a final resolution with its creditors by early 2024.
He stated: “We have already reached an agreement in principle with the official creditors and we are now engaging with private creditors. We have to reach a resolution with the private creditors as well. The rating agencies will consider a rating upgrade once we sign Memoranda of Understanding (MoUs) with the creditors and debt resolution is completed.”
He observed that a sovereign upgrade at this juncture would prove to be a significant boost for the Sri Lankan economy.
Semasinghe shared that they were looking to sign the respective MoUs with creditors as soon as possible and that they expected the process to be completed during the early part of the first quarter of 2024.
Sri Lanka successfully reached agreements in principle with the Official Creditor Committee and the Export-Import Bank of China on its debt restructuring in November and October respectively, providing it the required financial assurances to obtain the second tranche of the Extended Fund Facility (EFF) from the IMF.
Consequently, on Wednesday (13), the IMF Executive Board approved Sri Lanka’s first review under the EFF allowing for the immediate disbursement of SDR 254 million (about $ 337 million), bringing the total IMF financial support disbursed so far to SDR 508 million (about $ 670 million).