Lanka to restructure bilateral loans amounting to $10.81 bn
Sri Lanka is confident of gaining assurances from bilateral creditors for their debt restructuring to obtain International Monetary Fund (IMF) board approval towards unlocking the US$ 2.9 billion bailout package ahead of the IMF/World Bank spring meetings in Washington in mid-April, Finance Ministry sources said.
The debt restructuring covers only bilateral loans and not long term multilateral loans.
Bilateral creditors including China, India, Japan and Paris club member countries have expressed their willingness to restructure their debt amounting to $10.814 billion, the sources said.
The Finance Ministry along with the Central Bank have briefed those creditors on the country’s overall debt situation, status of the economy and the process of debt restructuring along with its modalities enabling them to extend their assurance to the IMF.
Accordingly financing assurances from bilateral creditors are required only for their debt as a pre-requisite to the IMFs 4-year economic programme for Sri Lanka and to unlock the $ 2.9 billion loan, a senior Finance Ministry official, familiar with the procedure, told the Business Times.
Although the total government external debt amounts to $35.052 billion as at end September 2022 only bilateral debt is considered for the debt restructuring process to release the IMF Extended Fund Facility, he explained.
Multilateral debt of $9.499 billion and commercial debt of $14.74 billion amounting to $24.239 billion will be dealt separately following different debt treatment procedures and this matter has no relevance for ongoing debt restructuring process, he added.
When asked about the $12.55 billion involved in International Sovereign Bond (ISB) issuance, he noted that this was categorised as commercial debt and most of ISB’s maturity periods will fall on 2024, 2025, 2026, 2027, 2028 and 2029 and each and every ISB has different dates of maturity and varied interest rates.
The only issue at hand is the repayment of $1.25 billion ISB on April 18 this year, he disclosed, adding that the government is servicing other multilateral loans including the World Bank and ADB amounting to $9.499 billion.
The Government-guaranteed debt and borrowings of the Central Bank are also a part of Sri Lanka’s total public debt.
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