Sri Lanka to discuss debt restructuring with India, China & Paris Club separately: President Wickremesinghe
Sri Lanka secured a USD 2.9 billion bailout package from the International Monetary Fund (IMF) last month to tackle its huge debt burden. The Washington-based global lender had made Sri Lanka's debt restructuring a prerequisite for granting the USD 2.9 billion bailout.
Sri Lanka will negotiate debt restructuring with India, China and the Paris Club separately, as part of an IMF-backed plan to reduce and manage the island nation's debt, President Ranil Wickremsinghe told lawmakers on Wednesday.
Sri Lanka is considering restructuring its local debt parallelly with its external debt, Wickremesinghe told Parliament as the country grapples with its worst economic crisis. Asserting that Sri Lanka needs to restructure its debt, Wickremesinghe, who is also the finance minister, said, "Sri Lanka's total debt is USD 83.6 billion. Foreign debt amounts to USD 41.5 billion, domestic debt amounts to USD 42 billion."
Sri Lanka secured a USD 2.9 billion bailout package from the International Monetary Fund (IMF) last month to tackle its huge debt burden. The Washington-based global lender had made Sri Lanka's debt restructuring a prerequisite for granting the USD 2.9 billion bailout.
Pointing that no firm decisions have been made on local debt restructuring, he said negotiations are continuing separately with India, Paris Club and China.
"China is expecting to work separately," Wickremesignhe said while launching a debate in Parliament on the IMF bailout programme.
"Then on one side we are discussing with Paris Club and India on one side. On the other side will talk with China," he said. Wickremesinghe said negotiations for local debt restructuring had started and added that Sri Lanka would launch negotiations with foreign creditors.
"We need to thoroughly consider all aspects. We will let no harm come to anyone. Some banks say they are unable to face this," the president said, adding that there should be no pre-conditions in local debt restructuring talks.
Wickremesinghe, however, said that when the discussions with foreign debtors are initiated, Sri Lanka would have to take decisions on restructuring its domestic debts. The IMF deal is expected to reduce the country's foreign debt by USD 17 billion, he said.
The president said that new legislation would be enacted soon, which will include a new public finance law and a revenue authority law, to implement the agreement with the IMF.
The IMF's Executive Board approved a 48-month extended arrangement under its Extended Fund Facility (EFF) with an amount of SDR 2.286 billion to Sri Lanka following financing assurances from the creditors.
Sri Lanka, which drew its first tranche of the USD 3 billion bailout programme, has already met an instalment to pay back an Indian line of credit which the island nation obtained early last year just before announcing the debt default.
The IMF bailout, the 17th in Sri Lanka's history, was approved following prolonged discussions over Colombo's unsustainable debt. Sri Lanka owes USD 7.1 billion to bilateral creditors, with USD 3 billion owed to China, USD 2.4 billion to the Paris Club and USD 1.6 billion to India, according to official data from its government.
The island nation was hit by an unprecedented financial crisis in 2022, the worst since its independence from Britain in 1948, due to a severe paucity of foreign exchange reserves, sparking a major political and humanitarian crisis in the island nation.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
lok-sabha-elections-2024-final phase-7 voting-date-last day to vote general election timings-states-seats-key-candidates-constituencies-ls-polls-general-election-schedule-time-table-results-date
From Axis to IDFC First - These bank stocks can give bumper returns in 3-4 weeks – Check target price and stop loss
Rules Changing from June 1: Aadhaar card update, driving license, LPG price and others - Check Full List
Central Railways' 63-hour mega block to hit Mumbai local train services, check dates and other details
SBI Senior Citizen FD Interest Rates 2024: What Rs 2 lakh, Rs 4 lakh, and 6 lakh, and Rs 8 lakh investments will give you in 1-, 3-, and 5-year FDs
Gold and Silver rate today (May 30, 2024): Precious metal futures trade in red; yellow metal near Rs 72,000, white metal falls by nearly Rs 1,500
05:46 PM IST