COLOMBO: Sri Lanka is confident of meeting its September deadline on completing debt restructuring talks with creditors, a top official said on Friday (May 26), as the debt-laden country works to emerge from its worst financial crisis in decades.
Sri Lanka, which defaulted on its foreign debt for the first time in history last April due to record low foreign reserves, is in talks with bondholders and bilateral creditors including China, Japan and India to put its debt on a sustainable track and turnaround its battered economy.
Sri Lanka President Ranil Wickremesinghe during a visit to Tokyo this week said Sri Lanka should be able to conclude a new round of restructuring talks by September or November at the latest, adding that the negotiations had made “remarkable” progress.
“What the president was saying is that the talks would be completed this year,” State Minister for Finance Shehan Semasinghe told Reuters, denying there was any official change in the timeline.
“Sri Lanka is confident of meeting the September timeline. The government is very committed and we are working on the best strategy with all creditors in a transparent manner.”
He also described the talks as “progressive”, but declined to give details as discussions were confidential.
Sri Lanka secured a US$2.9 billion bailout from the International Monetary Fund (IMF) in March and the country is targeting the finalisation of the debt talks to coincide with the programme’s first review also expected in September.
The IMF called this week for timely restructuring pacts with the country’s creditors. The global lender said Sri Lanka’s macroeconomic situation was improving, although earlier it had predicted the economy would contract 3 per cent this year.
Sri Lanka owes US$7.1 billion to bilateral creditors, with US$3 billion owed to China, US$1.6 billion to India and US$2.4 billion to the Paris Club, a group of creditor nations.
The government also needs to renegotiate more than US$12 billion of debt in eurobonds with overseas private creditors, and US$2.7 billion on other commercial loans.