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World Bank pushes SL to expedite restructuring, IMF

 

  • World Bank President warns of high risk and cost of slow progress amidst crisis
  • Advises to have a plan and execute it ‘quickly’

 

By Imesh Ranasinghe 

 

Sri Lanka should move quickly in its debt restructuring process and access the programme by the International Monetary Fund (IMF) as soon as possible, as the risk and cost of doing things slowly are high amidst the crisis the country is currently going through, said World Bank President David Malpass.

Speaking at an event held at Stanford University in California on Wednesday (28), he said that it is important that Sri Lanka move as quickly as possible to achieve debt sustainability and enter into a programme with the IMF, as the island nation “is really in a deep crisis”.

He reiterated that Sri Lanka has borrowed heavily and the World Bank is not very directly involved in a joint debt sustainability analysis with the IMF, as Sri Lanka is not listed among low-income countries.

“The most important thing is for Sri Lanka to have a plan and to execute it quickly because of the risk and the cost of doing things slowly in the midst of a crisis,” Malpass said.

In July, the World Bank said that until an adequate macroeconomic policy framework is in place in Sri Lanka, the World Bank will not offer new financing to the country. 

The World Bank also said that Sri Lanka requires deep structural reforms that focus on economic stabilisation and on addressing the root structural causes that created this crisis to ensure that its future recovery and development are resilient and inclusive.

Based on the presentation made to creditors by the Sri Lankan authorities, the country expects to obtain IMF Board-level approval for its Extended Fund Facility (EFF) of $ 2.9 billion by mid-December 2022, while it aims to finalise debt-restructuring talks with international creditors by the second quarter of 2023, after early assurances from lenders for the IMF programme.

“The most effective way to obtain the financing assurances quickly is the creation of an ad-hoc bilateral creditor co-ordination platform, allowing the official bilateral creditors to give their financing assurances to the IMF collectively after having debated among themselves,” the Sri Lankan authorities said.