The Debt Digest - March 2023

Abstract

The Debt Digest by Verité Research provides analytical commentary on the latest developments in Sri Lanka’s debt crisis. A key milestone in Sri Lanka’s path to recovery was the staff-level agreement with the IMF in September 2022 that outlined a necessary path of fiscal policy to regain macroeconomic stability and access to international credit markets. Sri Lanka is expected to obtain board level agreement with the IMF on 20th March 2023, 200 days after the staff-level agreement was reached. The agreement is for an Extended Fund Facility (EFF) that will provide 2.9 billion USD in foreign reserves support over four years. The present commentary looks at two recent developments: (1) the increase in Sri Lanka’s debt in 2022 based on the latest figures published by the Ministry of Public Finance, and (2) the letters of assurance received from a set of international sovereign bondholders and several of the major bilateral creditors.