Sri Lanka nears debt sustainability, striking debt relief deal with bilateral creditors
View(s):Sri Lanka is nearing the restoration of debt sustainability following the agreements with bilateral creditors including China on Wednesday, IMF officials confirmed expressing belief that the state authorities will strike a deal with private creditors soon.
An agreement has now been reached with China and other donor countries to restructure around US$10 billion in bilateral debt while it still needs to convince bondholders to restructure about $12.5 billion in international sovereign bonds.
Reaching an agreement with bilateral creditors would help the government authorities to conclude the restructuring process started in September 2022 after the country’s foreign reserves fell to record lows of $20 million and forced it to default on foreign debt for the first time in April 2022.
“We hope that there will be swift progress on reaching agreements with external private creditors in the near future,” Peter Breuer, IMF’s senior mission chief for Sri Lanka, said in a statement.
Sri Lanka’s total external debt is $37 billion, and it also has to negotiate with China Development Bank to restructure debt of $2.2 billion, Finance Ministry data shows.
According to the restructuring plan agreed by the two sides, Sri Lanka has gained a moratorium on repayment for bilateral creditors till 2028. The government and creditors would be able arrange new loans up to 2043.
Once the restructuring is completed, Sri Lanka aims to reduce its debt by $16.9 billion, a senior finance ministry official said.
To prevent the risk of another debt crisis, the medium-term debt management framework needs to be strengthened promptly, he pointed out.
Establishing the Public Debt Management Office (PDMO) by end-2024 and making it fully functional by end-2025 are important initial steps agreed upon under the IMF supported program.
The authorities should move expeditiously towards a holistic debt management strategy, with forward-looking plans tied to annual and quarterly issuance, along with stronger communication to increase transparency and predictability, IMF officials said.
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!