President strikes optimism on commercial debt restructuring too

27 June 2024 09:27 am Views - 116

• Says the agreements we reached today will provide significant relief to the economy
• Emphasises confidence in securing international support for economic recovery efforts

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In the wake of completion of debt restructuring with bilateral creditors, President Ranil Wickremesinghe sounded optimistic for the future of the country and said the agreement with International Sovereign Bondholders could be reached soon as the next step.

In his televised address to the nation on the occasion of this historic achievement, he extended gratitude to the creditors, including China and Exim Bank of China, India, Japan, and France, who co-chair the Official Creditors Committee.

“In 2023, we successfully completed the restructuring of domestic debt. Now, we have also successfully concluded the bilateral debt restructuring with foreign countries. Our next objective is to reach an agreement with commercial creditors, which includes International Sovereign Bond (ISB) holders,” he said.

He said, “The agreements we reached today will provide significant relief to our economy. In 2022, we spent 9.2% of our gross domestic product (GDP) on foreign debt payments. With the new agreements, it will pave the way for us to maintain debt payments at less than 4.5% of GDP between 2027 and 2032.

The government’s annual gross fiscal requirement was 34.6% of GDP in 2022. Due to these agreements, this requirement will decrease by more than 13% by the period of 2027-2032. In April 2022, Sri Lanka officially declared its inability to meet its debt obligations. Following this declaration, international business transactions with Sri Lanka came to a halt.”

The agreements will be presented to Parliament next week for ratification.

“The journey to this point has not been easy. We have travelled a difficult and arduous path. Our ministers and officials have worked tirelessly towards this goal. The majority of our citizens have supported us with patience and resilience, enduring various hardships. Despite the ongoing challenges, we have persevered,” he said. Referring to the past difficulties, he said he accepted the challenge without any preconditions. “I believed in my ability to save our country and its people from the economic abyss. I had a comprehensive work plan and a deep understanding of the strategies that other nations had employed to emerge from similar crises. I was confident that I could garner international support for our recovery efforts,” he said.