The debt restructuring process is accelerated

Sri Lanka is taking swift action to move the debt restructuring process forward with the help of financial and legal advisers, the Central Bank of Sri Lanka announced today.

The bank said negotiations with the International Monetary Fund (IMF) to reach a staff-level agreement on the Extended Financing Facility (EFF) arrangement are expected in the coming weeks.

The Central Bank also said gross official reserves, as of end-July 2022, are estimated at US$1.8 billion, including the People’s Bank of China swap facility equivalent to about US$1.5 billion. , which is subject to terms of use.

The Monetary Board of the Central Bank of Sri Lanka at its meeting on 17 August 2022 decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Bank central to their current levels of 14.50. percent and 15.50 percent, respectively. In arriving at this decision, the Council took into account the latest model-based projections, which point to a larger than expected contraction in activity and a faster than expected easing of price pressures, compared to the previous review. monetary policy.

Tight monetary and fiscal policies already in place, alongside measures to reduce non-emergency import spending, are expected to lead to a significant contraction in credit to the private sector and possible upside risks to near-term unemployment.

The Board was of the view that despite the fact that headline inflation is expected to remain high in the near term, the policy measures taken so far by the Central Bank and the government would help contain any aggregate demand pressures, thus anchoring inflation expectations, as well as forecasts of lower world commodity prices and their impact on domestic prices in the period ahead. (Colombo Official Gazette)

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