Central Bank expresses optimism on concluding private debt restructuring soon

Central Bank Governor Nandalal Weerasinghe on Tuesday reiterated that private creditor debt restructuring negotiations between the advisors of both sides are expected to be concluded soon

He told a media conference in Colombo that the IMF Executive Board will approve the progress achieved by the government in the implementation of the EFF-supported programme at their upcoming meeting next month

It will consider the implementation of prior actions, the EFF-supported programme, and assess the progress in debt restructuring to unlock the US$337 million third tranche of the EFF.

Sri Lanka is to prove adequate progress in debt restructuring, the fulfillment of prior actions and implementation of EFF-supported programme that would confirm multilateral partners financing contributions to receive the approval of IMF executive board

The total debt burden of Sri Lanka is a staggering $96 billion, with each citizen carrying a per capita debt of approximately Rs. 1.25 million. Foreign debt is $38 billion, while the government reserve is $5 billion.

On Tuesday, the Central Bank decided (through its Monetary Board) to maintain policy interest rates at their current levels but there was a possibility to further reduce the market interest rates, he revealed.

Although the financial institutions have reduced those rates, it was not in par with the reduction of interest rates of the Central Bank, he said adding that the interest rates for new loans should be reduced.