#1August 2022 Ministry of Finance, Economic Stabilization & National Policies Update to Creditors#2Disclaimer IMPORTANT: The attached presentation has been prepared solely for information purposes and on the basis of your acceptance of this disclaimer. This document and the information contained herein (the "Information"), do not contain all of the information that is material to a creditor of the Democratic Socialist Republic of Sri Lanka (the "Republic"). By reading and/or using this presentation, you agree to be bound by the following limitations and conditions and, in particular, will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this disclaimer. 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There may be material variances between estimated data set forth in this document and actual results, and between the data set forth in this presentation and corresponding data previously published by or on behalf of the Republic.#3Sri Lankan Authorities Already Took Measures to Tackle the Unprecedented Crisis the Country is Facing The Authorities have decisively reacted to the crisis, taking a series of challenging decisions aiming at restoring macroeconomic stability as promptly as possible ONETARY ATION BUNLA Engaging with the International Monetary Fund to Secure a Program¹ 10 Implementing an Interim Debt Policy to Preserve Liquidity 000 Hiring Financial and Legal Advisors Think Initiating the Design of an Economic Reform Program 9 8 22% 76543 c 2 1 CBSL's FX Reserve Holdings² (in USDbn) Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Engaging with Bilateral Creditors, Notably to Secure Emergency Liquidity Credit Lines Source: Central Bank of Sri Lanka Note: (1) Supported under the Extend Fund Facility ("EFF"), (2) Liquid reserves remain at significantly low level at present 2 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22#42022 Where do we Stand in the Discussions with the IMF? - Update on the Process From the outset of the crisis, Sri Lanka called upon the IMF to provide financing to tackle the severe liquidity crisis and catalyze the restructuring process April • Initial technical discussions between the IMF team and the Authorities on the Program (notably the reform package) • Announcement of the interim debt policy June/July • Follow-up Staff Missions and technical follow-up sessions • Discussions on the Debt Sustainability Analysis and related constraints September through November • Securing financial assurances from official creditors Ensuring compliance with the Lending Into Arrears Policy Confirming contribution from other IFIs for the financing of the program IMF Board Approval • Delivery of prior actions SLA Board Approval February May August • Formal request letter sent to the IMF • IMF Virtual Staff Mission to Sri Lanka (incl. high level meetings with SL Authorities and Staff-Level agreement Authorities' Continuation of discussions with IMF Staff and technical updates objectives technical discussions with competent bodies) ▸ Sri Lanka is currently in active negotiations of a realistic macro-economic and fiscal framework with the IMF. This should lead to a Staff-Level Agreement in the coming weeks that will unlock the necessary financing to address the liquidity needs the country is currently facing#5As per the Debt Sustainability Analysis Conducted by the IMF, Sri Lanka's Public Debt Has Reached Unsustainable Levels - End-2021 Debt Stock¹ Public Debt stood at 114% of GDP as at end 2021, of which 47% was denominated in foreign currency Foreign Currency Local Currency Total In USDbn equiv. Total Total USDbn % of GDP² Central Government Debt 38.9 50.5 89.4 101.3% Multilateral 9.5 9.5 10.7% Bilateral 9.6 9.6 10.9% Private³ 19.8 46.2 66.0 74.8% Bonded 15.3 46.1 61.4 69.6% Non-bonded CBSL Guaranteed SOEs Debt Multilateral Bilateral Commercial (incl. SOE debt) Central Bank of Sri Lanka's Debt Multilateral Bilateral4 4.5 0.1 4.6 5.2% 4.3 4.3 4.9% 5.4 3.1 8.5 9.6% 0.5 0.5 0.5% 0.3 0.3 0.4% 4.6 3.1 7.7 8.7% 3.0 3.0 3.4% 1.3 1.3 1.4% 1.8 1.8 2.0% TOTAL 47.3 53.6 100.9 114.4% Source: Ministry of Finance Note: (1) The debt stock showcased reflects the DSA coverage currently contemplated by the Authorities, (2) Assuming a 2021 nominal GDP of 17.69trn LKR, (3) Includes ECA- backed facilities, (4) Bilateral swap lines with the People's Bank of China and the Bank of Bangladesh included in the IMF DSA Perimeter#6Sri Lanka's External Public Debt Includes a Wide Range of Bilateral Creditors Central Government and Guaranteed SOEs' external public debt has a broad variety of bilateral creditors, for USD 10bn in overall bilateral debt Who holds Sri Lanka's bilateral debt¹? In % Overall Bilateral debt (ca. USD 10 bn, including USD 0.3bn Guaranteed SOEs bilateral debt) Saudi Arabia USA Kuwait Spain Germany. 2% 1% 1% 1% Other² 1% 2%. Iran France. 1% 2% Korea 3% India. 10% China 44% Key metrics of Sri Lanka's CG existing debt³ Terms Weighted Average Maturity Average Interest Rate FX Denominated Debt 6.68 years 2.9% Japan. 32% LC Denominated Debt 3.86 years 9.3% Note: (1) Central Government and Guaranteed SOEs external bilateral debt, (2) "Other" includes Russia, Hungary, Sweden, Canada, Australia and Pakistan, (3) Total CG Existing Debt as of end 2021 5 Overall 5.66 years 4.8%#7Next Steps Although the process is highly dependent on the progress of an IMF program, the country has a clear view on the next steps in the restructuring process Finalize discussions with the IMF to reach Staff-Level Agreement Public Investor Presentation to update creditors on economic situation and process Continue engagement with creditors and sharing of information Continue engagement with creditors in order to obtain financing assurances Reach IMF Board Approval and unlock additional much-needed multilateral financings ▸ Negotiations of debt treatment with creditors included in the restructuring perimeter Execution of the restructuring agreements