• IMF is currently assessing whether the agreed terms of Sri Lanka's debt restructuring with bondholders align with the programme parameters, and the results of this assessment will be communicated once complete. Additionally, sustaining reform momentum and addressing fiscal challenges, including improving tax administration and reducing tax exemptions, remain critical for Sri Lanka.

At a press briefing held last Friday (12), IMF Director of Communications Julie Kozack stated that the IMF is still assessing whether the agreed terms of the debt restructuring with the bondholders are consistent with the programme parameters. She mentioned that once this assessment is complete, the IMF will communicate their views. Kozack also emphasized the importance of sustaining the reform momentum achieved through the programme in Sri Lanka, as significant vulnerabilities and uncertainties remain. Earlier this month, Sri Lanka proposed a deal for Macro Linked Bonds (MLB) with the Ad Hoc Group of bondholders, suggesting a 28% haircut on the principal of the existing $12.5 billion bonds and an 11% haircut on the $1.9 billion past due interest, with the haircuts contingent on Sri Lanka’s average nominal GDP performance by 2027.

Additionally, Kozack highlighted the importance of recognizing the difficulties Sri Lanka has faced over the past few years and the complex policy tradeoffs, particularly concerning debt and fiscal positions. She noted the necessity for the government to have resources to pay its bills, emphasizing the need for tax contributions from those who can most afford to pay. This priority involves improving tax administration and reducing the number of tax exemptions granted in the past.

IMF still assessing bondholder deal | The Morning