• To be finalised as soon as possible
• CBSL Governor says creditors to be formally approached only after IMF staff deal
• Still hopeful of EFF disbursement by year-end

BY P. Waravita   Sri Lanka’s debt restructuring plan, which is crucial to reaching the eagerly awaited agreement with the International Monetary Fund (IMF), is yet to be finalised, despite the IMF team being scheduled to arrive in the country tomorrow (24) for continued discussions on economic reforms. “We have not finalised the debt restructuring plan yet. We are still working with the financial and legal advisors on this matter and are in discussions with our stakeholders,” official sources told The Morning yesterday (22). They added that they hope to complete the plan as “soon as possible” so that the country can proceed with the relevant negotiations. At the Central Bank of Sri Lanka’s (CBSL) Monetary Review brief on 18 August, CBSL Governor Dr. Nandalal Weerasinghe said that the IMF delegation will be in the country this month with the intention of reaching a staff-level agreement. “We are hoping that they will be here towards the end of the month and then we should be able to finalise and reach the staff-level agreement,” said Dr. Weerasinghe. In a statement on 19 August, the IMF said that they plan to visit Colombo from tomorrow to 31 August to continue discussions with the Sri Lankan authorities on economic and financial reforms and policies. “The objective is to make progress towards reaching a staff-level agreement on a prospective IMF Extended Fund Facility (EFF) arrangement in the near-term,” said the statement. An IMF delegation visited Sri Lanka in June of this year as well, and the Government of Sri Lanka had hoped to reach the staff-level agreement during that visit. Following the failure to reach such an agreement, then-Prime Minister Ranil Wickremesinghe, addressing Parliament in early July, said that the debt restructuring plan would be presented to the IMF in August. "We hope to submit this report to the IMF by August. Once this is done, we will be able to reach an agreement. The debt restructuring package will be shown to the IMF before Sri Lanka meets the creditors," he had said at the time. The IMF said at the conclusion of their visit in June: “The discussions will continue virtually with a view to reaching a staff-level agreement on the EFF arrangement in the near term. Because public debt is assessed as unsustainable, executive board approval would require adequate financing-related assurances from Sri Lanka’s creditors that debt sustainability will be restored.” Meanwhile, during an interview with Bloomberg yesterday, Dr. Weerasinghe said that the country can only formally approach its external creditors once the staff-level agreement with the IMF is reached. “We have not officially approached the creditors yet. We need a staff-level agreement first, and only after that will we be reaching out to them formally. But in between, we have been sharing all our data and information with our creditors for them to facilitate the process.” Speculating on a possible timeline of the EFF, Dr. Weerasinghe said that once the staff-level agreement has been reached, Sri Lanka has to approach its external creditors and start discussions “in good faith for relief”. “For that, we need assurance from our external creditors and we think that that would take about three or four months. If all goes well and everybody co-operates with our debt management strategy, then we hope to obtain financial assurance in December so that the IMF can submit our paper to the External Fund and start disbursing the EFF towards the end of this year. That is the timeline we would like to implement. That depends on the external creditors and the negotiation process. Hopefully, all relevant parties will support us,” he elaborated. Discussions with the IMF for an anticipated $ 3 billion bailout package began earlier this year, after several months of delay when former CBSL Governor Ajith Nivard Cabraal was in charge. The Government of Sri Lanka also chose the France-based financial services provider Lazard and UK-based law firm Clifford Chance LLP to aid in its debt restructuring efforts.