Sri Lanka hard-pressed against time to conclude agreements for debt restructuring

Colombo, April 9 (Daily Mirror) - Sri Lanka is hard-pressed against time to reach agreements with creditors including bondholders before June, when the third tranche of the International Monetary Fund (IMF) extended fund facility is expected, Daily Mirror learns.

Sri Lanka is expected to get the next tranche of US $ 337 million in June after the third review of the programme.

Before that, Sri Lanka has to sign the MoU with the Paris Club of Nations on restructuring bilateral debts while signing a separate agreement with China for the same purpose but on terms acceptable to all the bilateral creditors.

Asked about the latest developments, a government source said the government to finalize the agreements in principle with commercial creditors including bondholders before that.

Besides, the presidential election is scheduled to be conducted later this year. The Election Commission is expected to issue the gazette notification calling for the election by the end of June, making it even more challenging for the government to finalize the debt restructuring process.

Sri Lanka declared bankruptcy in April, 2022 and since then the country has defaulted payments of US $ 6 billion.

The government is planning to settle 37 per cent of debts within the first six years after the resumption of debt servicing in keeping with the agreements to be reached, 51 per cent within 6- 20 years and the remaining 12 per cent after 20 years.

Cabinet spokesman Minister Bandula Gunawardane said whoever wins the election, debt servicing will continue according to the plan to be approved.