Sri Lanka aims to resume talks with bondholders following the assessment of their latest proposal by the International Monetary Fund (IMF), according to State Minister for Finance Shehan Semasinghe. Initial face-to-face discussions in March led to exchanged proposals, yet an agreement on triggers and the quantum of upside was not reached, prompting the IMF to deem the March proposal insufficient. The April proposal awaits IMF assessment to ensure alignment with debt sustainability parameters. The next steps involve consultation with the IMF staff before further discussions with bondholders, aimed at reaching common ground before the IMF board considers the second review of Sri Lanka’s EFF program.

Bondholders advocate for a GDP-linked approach, expressing concern over the narrowness of IMF GDP growth projections. Additionally, they propose a governance-linked security, known as an ESG bond, suggested by Sri Lanka’s Verité Research. Semasinghe notes progress from recent constructive discussions with bondholders, where technical issues were bridged, though Sri Lanka emphasizes remaining concerns to be addressed satisfactorily.

Sri Lanka to resume bondholder talks after IMF checks their latest proposal | Economy Next