In the midst of ongoing negotiations with creditors on debt restructuring, Sri Lanka appears to be on the cusp of securing an agreement with the International Monetary Fund (IMF). Officials from the South Asian nation, along with representatives from the IMF, have reportedly made significant progress towards a staff-level agreement during discussions in Morocco this week, according to sources close to the matter who requested anonymity due to the preliminary nature of the discussions.

Although a few issues remain to be resolved, details about the specifics have not been disclosed. The IMF is currently evaluating Sri Lanka's progress in achieving economic targets and reforms as outlined in the nation's $3 billion bailout package. The imminent staff-level agreement is a crucial step towards obtaining a second tranche of $334 million in loans.

Sri Lanka's road to securing these funds involves not only the IMF agreement but also separate negotiations with creditors, including the Paris Club, on restructuring terms that align with the program's debt sustainability criteria. These discussions are taking place concurrently in Morocco during the IMF-World Bank annual meetings. While there were hopes for the official creditors committee to sign a memorandum of understanding with Sri Lanka this week, the likelihood of an announcement is diminishing, as sources familiar with the situation reveal.

The failure to reach a resolution on debt restructuring this week may slow down the IMF funding program's progress. Key Sri Lankan figures involved in the negotiations, such as central bank Governor Nandalal Weerasinghe and Junior Finance Minister Shehan Semasinghe, have not responded to inquiries seeking confirmation. Meanwhile, IMF officials in Colombo have not issued an immediate comment.

In a separate development, Sri Lanka has successfully reached an agreement with the Export-Import Bank of China to restructure $4.2 billion of debt. The Sri Lankan government views this agreement as a potential cornerstone for future negotiations with other bilateral creditors and bondholders, which could ultimately pave the way for the IMF's approval of the second tranche of funding for the nation.