The International Monetary Fund (IMF) has expressed concerns over the Government’s possible deviation from the ongoing debt restructuring programme, following its move to explore a debt-for-nature swap earmarked at around $ 1 billion, The Sunday Morning learns.
However, President Ranil Wickremesinghe has directed his officials to commence the process of identifying the projects that could be taken under a debt-for-nature swap, it is learnt.
Wickremesinghe has tasked his Advisor on Climate Change Ruwan Wijewardene to spearhead the initiative with the support of the Environment Ministry, Presidential Economic Advisor Dr. R.H.S. Samaratunga, and the Central Bank of Sri Lanka (CBSL).
Given the obstacles and delays faced by Sri Lanka in finalising the Extended Fund Facility (EFF) from the IMF, which has now been pushed back to around March next year, the Government has turned to the environment and climate financing for reprieve from the ongoing economic crisis.
The Government has reportedly commenced talks with the UN Development Programme (UNDP) and other agencies to explore the possibilities of a debt-for-nature swap programme.
When asked about the Government’s latest initiative and the concerns raised by the IMF, Wijewardene told The Sunday Morning that the Government was seriously looking at the option and was now preparing the groundwork. “The groundwork will be done. We can then proceed once the (debt) restructuring process is completed,” he added.
It is further learnt that the CBSL is also looking at drawing a framework for bonds (blue bonds, green bonds, etc.) and the draft is expected to be prepared by the end of December.
The Sunday Morning’s ‘Black Box’ exclusively revealed last month that President Wickremesinghe had turned to climate change and the environment to raise funds amidst delays in finalising the proposed financial aid from the IMF.
The President’s visit to Egypt to attend the COP27 summit, where he met with several key global leaders on the sidelines, was mainly aimed at setting the groundwork to initiate the debt-for-nature swap programme.
Meanwhile, striking a deal with Sri Lanka’s key creditors on a debt restructuring plan along with a haircut remains inconclusive, with China holding back on agreeing to a haircut, resulting in both India and Japan adopting a ‘wait-and-see’ attitude.
It is learnt that China is willing to consider a delay in repayment of the loans, but not a haircut, which is a key requirement of the Sri Lankan Government.
The discussions held between the Government and creditors last week had concluded with all parties agreeing to engage in further discussions on the matter, it is also learnt.