Sri Lanka is set to sign a crucial Memorandum of Understanding (MoU) on debt restructuring with bilateral creditors – the Official Creditor Committee (OCC) of the Paris Club and China – this week. 

A senior Government official confirmed to The Sunday Morning that the MoU would be formally signed on Wednesday (26).

The International Monetary Fund (IMF) recently highlighted the significance of Sri Lanka’s agreements-in-principle with the OCC and the Export-Import (Exim) Bank of China, marking essential milestones towards managing the country’s debt sustainability.

Treasury Deputy Secretary R.M.P Rathnayake stated that all preparations had been finalised for the signing with the OCC.

Reports from foreign media suggest that the OCC is likely to grant a six-year moratorium. 

This development follows the completion of the IMF’s second review and a Staff-Level Agreement reached with Sri Lanka, which unlocked approximately $ 337 million pending approval by the IMF Executive Board.

However, progress hinges on Sri Lanka’s implementation of specified actions and a review of financing assurances. The IMF emphasised the need for confirmed commitments from multilateral partners and substantial advancements in debt restructuring to ensure adherence to the programme’s debt targets.

Sri Lanka is currently working towards securing agreements with its private creditors, with IMF Senior Mission Chief Peter Breuer urging prompt progress on these critical negotiations.