Colombo, Nov 29 (EFE).- Sri Lanka has reached an in-principle agreement on debt restructuring with creditor states, paving the way to release fresh funds from the International Monetary Fund (IMF) to the crisis-ridden country, the Paris Club of creditor nations said on Wednesday.
In May, 17 countries set up an Official Creditor Committee (OCC), co-chaired by India, Japan, and France, to respond to Sri Lanka’s debt treatment plan request.
“The OCC and Sri Lanka agreed on the main parameters of a debt treatment consistent with those of the Extended Fund Facility (EFF) arrangement between Sri Lanka and the IMF,” said the French-chaired Paris Club.
“This agreement will allow the IMF staff to present to the IMF Executive Board the first review of Sri Lanka’s EFF arrangement and open the way for approval of the second disbursement under the arrangement.”
The club said the committee was ready to formalize the agreement and sign an MoU with the Sri Lankan authorities.
It said the committee expected other bilateral creditors to agree to transparently share the information required for the OCC to assess the comparability of treatment regarding their respective mutual agreements.
“The OCC also expects that the Sri Lankan authorities will continue to engage with their private creditors to find as soon as possible an agreement on terms at least as favorable as the terms offered.”
Sri Lanka called it a “significant milestone” that the OCC “confirmed its agreement in principle on specific financing terms to restructure Sri Lanka’s debt.”
“We are very grateful to bilateral creditors for their cooperation,” junior Finance Minister Shehan Semasinghe wrote on the social media platform X (formerly Twitter).
“It confirms that all official creditors have agreed to restructure Sri Lanka’s debt, which is a major step in the resolution of (Sri Lanka’s) economic crisis,” said Semasinghe.
Last year, Sri Lanka declared bankruptcy amid severe shortages of essential goods, including food, medicine, and cooking gas, sparking mass protests. EFE