Director of the Asia and Pacific Department of the International Monetary Fund (IMF), Krishna Srinivasan has stated that the debt relief Sri Lanka currently awaits is expected to contribute USD 17 billion to close the Balance of Payments (BOP) financing gap from 2023 – 2027.

Speaking at the World Bank Group and IMF Spring Meetings, Srinivasan stated the IMF aims to restore debt sustainability and the BOP pressures even after the programme ends.

Thus, he explained that while the debt relief programme will cover nearly USD 17 billion of Sri Lanka’s USD 24 billion financing gap, the rest of the funds are expected to be covered by International Financial Institutions (IFIs).

He noted, however, that the process according to which the restructuring will happen, or how the required relief will be provided, must be negotiated between Sri Lanka and its creditors, stating that the IMF ‘does not get involved’ in this process.

He explained that Sri Lanka will be required to negotiate the matter with its creditors, and the form in which the debt relief will be provided, including principle haircuts, extension of maturity and interest reductions.

Sri Lanka is expected to outline a blueprint later this month, which will provide a basis for engaging with their creditors pertaining to the debt restructuring process.