Colombo: Sri Lanka's Finance Ministry warned on Friday that any attempt to revisit the debt sustainability assessment (DSA) tied to the International Monetary Fund (IMF) bailout programme could jeopardize the country’s ongoing recovery efforts.
The ministry issued a statement explaining that while any country has the right to dispute the IMF’s DSA model, doing so could result in a prolonged delay in reaching an agreement on a financing programme. "A standoff in such a scenario would only delay an agreement on a financing programme for several months, if not years," the statement emphasized.
The IMF is unable to proceed with financial assistance if a nation’s debt is deemed unsustainable, underscoring the importance of the debt restructuring process. The Finance Ministry's statement comes in response to the Marxist Janatha Vimukthi Peramuna (JVP)-led National People's Power (NPP) party, which recently pledged in its manifesto for the upcoming presidential election on September 21 to pursue an alternative debt sustainability analysis and challenge the IMF's revenue-based fiscal consolidation measures.
The ministry emphasized that Sri Lanka’s agreement with creditors on sovereign debt restructuring requires IMF endorsement to ensure the terms provide adequate debt relief, meeting IMF debt targets.
The warning aligns with President Ranil Wickremesinghe’s stance that the current IMF-backed bailout programme is crucial for the country’s full recovery. Since Sri Lanka declared bankruptcy in April 2022 and defaulted on its sovereign debt for the first time, Wickremesinghe has worked to stabilize the economy with the help of international partners.
Despite some economic improvement, his government’s reforms, particularly those increasing utility costs, have drawn significant criticism. Opposition parties have targeted his economic policies ahead of the upcoming election.
Anura Kumara Dissanayake, the NPP candidate, has emerged as a leading challenger, according to unofficial polls, though neither he nor main opposition candidate Sajith Premadasa has explicitly committed to reversing the IMF measures.
Source-PTI
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