Sri Lanka nearing debt restructuring: President Wickremesinghe
The debt restructuring and related financial assurances would enable IMF to conclude its first review of the $ 2.4 billion bailout facility approved this year
Sri Lanka is about to secure a statement of agreement from external creditors on debt restructuring to enable the IMF to conclude its first review of the $ 2.4 billion bailout facility, President Ranil Wickremesinghe said on Wednesday.
Sri Lanka was hit by its worst economic crisis last year when its foreign exchange reserves plunged to a critical low and the public took to the streets against shortages of fuel, fertilisers and essential commodities.
Wickremesinghe told the Sri Lanka Economic Summit 2023 in Colombo: "China's Exim Bank was the first to provide Sri Lanka with the agreement in principle. We expect the official creditor committee to provide a similar agreement."
In October, Sri Lanka confirmed that it had concluded a preliminary deal with China on restructuring its debts to Beijing, seen as a "big step" in the cash-strapped country's economic recovery.
China holds about 52 per cent of Sri Lanka's USD 46 billion external credit. Beijing and Colombo reached a pact on the key principles and indicative terms of debt treatment with the Export-Import Bank of China.
The discussions with private creditors are continuing, Wickremesinghe said.
IMF bailout
The debt restructuring and related financial assurances would enable the International Monetary Fund (IMF) to conclude its first review of the $ 2.4 billion bailout facility approved in March this year.
The second tranche of the four-year facility of $330 million dollars will come thereafter.
The governor of the Central Bank, Nandalal Weerasinghe, said last week that the release of the second tranche would trigger support from the Asian Development Bank and the World Bank alongside budgetary support from the IMF.
Wickremesinghe announced that Sri Lanka’s current bankrupt state of its economy would cease in December.
Sri Lanka declared bankruptcy in April 2022 which saw the ouster of President Gotabaya Rajapaksa. The country announced its sovereign default – for the first time since independence from Britain in 1948.
(With agency inputs)
