Colombo: Sri Lankan Foreign Minister Ali Sabry has cautioned against attempts to renegotiate the country’s Debt Sustainability Agreement (DSA), warning that such actions could disrupt the ongoing economic recovery and jeopardise crucial financial support from international lenders.
Speaking at a news conference on Wednesday, Sabry emphasised that the DSA, which has been enshrined in law, cannot be easily altered. Renegotiating the terms could delay the next tranche of the 2.9 billion dollars IMF bailout package, expected in December, and threaten subsequent disbursements from the World Bank and the Asian Development Bank.
Sri Lanka, which defaulted on its sovereign debt in April 2022, is currently navigating a delicate recovery process. Sabry highlighted the risks of renegotiating with the IMF, including the potential loss of 1.2 billion dollars to 1.3 billion dollars in funding, which could trigger further economic instability, including a devalued rupee and rising inflation.
With the Presidential election approaching on September 21, some opposition leaders have suggested renegotiating the IMF terms, a move Sabry strongly advised against, warning of the severe economic consequences.
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