Sri Lanka to clear debt restructuring hurdle with Indian help
Sri Lanka is now facing another gigantic task of persuading a large number of multilateral and commercial lenders for debt restructuring assurances despite the consent of India and likely consent of China and Japan for the country to proceed with the debt restructuring process.
It’s ongoing debt rescheduling negotiations with China and India “are successful, “and discussions with Japan have been concluded recently, President Ranil Wickremesinghe told a recent official meeting without divulging details, Presidential Secretariat sources divulged.
India reported to have been given its assurance in favour of the island nation’s debt restructuring directly to the International Monetary Fund (IMF), clearing the way towards IMF executive board approval to release the US$ 2.9 billion bailout loan to Sri Lanka, local and foreign media said.
The IMF board approval could be further delayed as similar assurances are needed from Non-OECD /PC bilateral Sovereign State creditors.
It is also essential to get assurances from Paris Club members including Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, Netherlands, Norway, Russia, South Korea, Spain, Sweden, Switzerland, United Kingdom and United States.
Financing assurances from official creditors would be sufficient to secure the first IMF board approval and disbursement.
While China and India are not part of the Paris Club, Chinese Premier Li Keqiang recently said following a meeting with the IMF managing director that China is willing to work with other creditors “to formulate and participate in a fair and equitable debt restructuring plan”, foreign media reported.
The responsibility is now on with the Euro Bond traders (SBs), like Blackrock and Hamilton Reserve Bank that sued the Government in the first instance, and their debt collectors, including the Paris Club and international donor agencies IMF and WB, to cancel the debt without delay, a former Treasury secretary told the Business Times.
Fulfilling the IMF’s economic targets and commitments, including the timely restructuring of commercial debt indicated in the reform programme could pose challenges, possibly disrupting the IMF programme, he added.
However some of the key commitments including the implementation of major tax reforms that include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT, introducing cost-recovery based pricing for fuel and electricity to minimise fiscal risks arising from state-owned enterprises have been fulfilled by the government.
It has also mitigated the impact of the current crisis on the poor and vulnerable by raising social spending and restoring price stability through data-driven monetary policy action, fiscal consolidation, phasing out monetary financing.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!