Renegotiating debt terms can lead to further economic instability: Sri Lankan foreign minister
Sri Lanka's Debt Sustainability Agreement, Foreign Minister Ali Sabry has said resuming negotiations with the IMF could jeopardise its next tranche due in December and subsequent disbursements from the World Bank and the Asian Development Bank.
The conditions for the Debt Sustainability Agreement (DSA) have now become part of the law and cannot be easily altered, Sabry said. He emphasised that renegotiating the deal could lead to further economic instability in the island nation, which is recovering from the worst-ever economic turmoil it suffered in 2022.
Sri Lanka declared its first-ever sovereign default in mid-April 2022, having run out of its foreign exchange reserves. The halt to the debt services meant that the multilateral creditor nations and commercial lenders could not extend fresh financing to the country.
In July, the Sri Lankan government reached a debt restructuring deal with international sovereign bondholders after protracted negotiations with countries like China, India, France and Japan.
Addressing a news conference on the 'Two Years of Progress and Advancement' at the Presidential Media Centre on Wednesday, Sabry detailed the stringent parameters of the DSA and emphasised that renegotiating with the International Monetary Fund (IMF) is a very serious and unsuccessful endeavour.
Sri Lanka is currently in negotiations with the IMF, which has made external debt restructuring conditional to the USD 2.9 billion bailout package.
The third tranche of the bailout package was released in mid-June as
