IMF says reducing debt stock alone insufficient

Debt restructuring nearly complete, $ 500 m outstanding

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THE International Monetary Fund (IMF) said Sri Lanka's debt sustainability will depend on the Government's continued fiscal discipline, macroeconomic reforms, and completion of restructuring agreements under the Extended Fund Facility (EFF).

IMF Mission Chief Evan Papageorgiou told reporters in Colombo that debt restructuring is almost complete.

"Restructuring is nearly complete," he said. "The Eurobond exchange was completed successfully in December 2024, almost a year ago, and several bilateral agreements have been signed so far with Japan, India, and others as well." He said Sri Lanka has made significant progress in reducing its external debt burden.

"Of the $28 billion of external debt that we have under the perimeter, now we have only half a billion left in terms of which restructuring agreements need to be reached," Papageorgiou said.

"The next step for that is to finalise the bilateral OCC official credit committee agreements and to reach the agreements with the remaining commercial and official creditors." He said the finalisation and execution of restructuring agreements are essential but must be accompanied by continued policy discipline "The finalisation, the execution of the restructuring agreements is key, but alongside that there needs to be continued fiscal prudence, ongoing macroeconomic reforms, and maintaining fiscal sustainability and debt sustainability. All these go hand in hand," he said.