Sri Lanka's Public Debt Sustainability and Restructuring Update

Even faced with a complicated outlook, Sri Lanka took immediate measures to achieve a certain degree of normalcy with support from international partners... Immediately after the announcement on the moratorium, the Government and the Central Bank took the necessary steps to contain the economic impact of the foreign exchange crisis and assist the population, while obtaining some fundamental help from key partners The Government and the Central Bank did not hesitate to undertake key measures to come to the aid of the local population, including energy and living costs reductions: ○ The Government implemented measures to alleviate pressure on the most vulnerable citizens, including imposing price ceilings on essential food items, smoothing out the distribution of limited fuel stocks, cancelling farmer loans and distributing cash grants to the poor and vulnerable The Central Bank reacted swiftly to rising prices, hiking the key policy rates by 700bps in the April monetary policy meeting followed by a further tightening of 100bps in July 2022 О Sri Lanka received key financial and humanitarian aid from international partners, including (but not limited to): Immediate financial aid in the form of fuel lifelines to the Government, and swap lines signed with the Central Bank Loans, grants and humanitarian assistance focused on food, fuel and fertilizer provision, originating from key partners ▸ Even in a highly complicated outlook, the authorities were able to react quickly by announcing and implementing key fiscal reforms while reaching out to key partners for immediate and urgent help Sources: Ministry of Finance, Economic Stabilization and National Policies, Central Bank of Sri Lanka 9

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