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Domestic debt restructuring: Key decision next week
Government plans to go ahead with Domestic Debt Restructuring (DDR) and a final decision on how to proceed with it will be taken next week.
A senior Treasury official told the Sunday Times that the country would have to conclude the process prior to restructuring its international debt, given the seriousness of the situation and that the Finance Ministry was already making arrangements to begin the DDR process from next month.
“Sri Lanka’s international creditors are willing to make sacrifices to help the country. It is only fair that domestic creditors make the same effort. If not, it will become more difficult to obtain assistance from international bodies such as the International Monetary Fund (IMF),” the official said.
A special party leaders meeting has been convened for next week to decide on holding a weekend session of Parliament to approve the process. Government sources said they were prepared for a parliamentary vote on the issue.
Treasury officials insisted that domestic debt restructuring would not cause the collapse of local banks or negatively impact the country’s financial stability. “Debt restructuring is a wholly voluntary process. We cannot force anyone to take it on,” the official said.
While Sri Lanka would not be able to pay off its debts immediately, it would become possible as the economy gradually improves in several years, he added.
Treasury holdings of the Central Bank of Sri Lanka (CBSL) too will have to be restructured as part of the debt restructuring process.
President Ranil Wickremesinghe was due back in Colombo over the weekend and will have high-level meetings on the outcome of his talks in Britain and during the recently concluded Paris Summit on a new global financial pact.
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