Debt restructuring with bondholders hits a snag with disagreement on two areas

Colombo, April 16 (Daily Mirror) - Sri Lanka’s debt restructuring process with private bondholders is stuck with two aspects of disagreement, whereas it is well underway with bilateral creditors, a top official said yesterday.

Chief of Staff of the President Sagala Ratnayake told journalists that both parties, instructed by respective consultants, held two talks this year with each submitting proposals and counter-proposals.

He said the International Monetary Fund (IMF) cited the government’s proposals as compliant, whereas the bondholders’ proposals were not.

After that, he said there were four areas with disagreements were identified and subsequent negotiations resulted in narrowing them down to two.

Asked whether it was the local dealer or foreign dealers (bondholders) who disagreed, Mr. Ratnayake said these details could not be divulged. “We cannot come out with details on these factors as we have agreed to maintain confidentiality concerning discussions,” he said in this regard.

Also, he said discussions with private dealers are only a part of the debt restructuring programme. “We have had a successful round of negotiations with the Official Creditor Committee (OCC) which comprises bilateral creditors. Sri Lanka has also had a successful round of discussions with China as well. We have only to decide whether there is going to be a single agreement with OCC or we are going for individual agreement with each member state of the OCC,” he said in this regard. He assured that Sri Lanka has no issue with the bilateral creditors.

"We have only to sign agreements with OCC members," he said.

Referring to the sentiments expressed by the IMF, Mr. Ratnayake said all international donors including the IMF have expressed its satisfaction with the economic progress Sri Lanka has achieved lately. “However, IMF has made it clear that it will stick to its programme,” he said.