Cabraal denies debt restructuring talks with bankers from Rothschild, Lazard

• Says discussions were only about offers of new financing 
• Citing unnamed sources, Wall Street Journal reported that Lankan officials met with restructuring bankers from Rothschild & Co. and Lazard

Central Bank Governor Ajith Nivard Cabraal yesterday refuted the foreign media reports that Sri Lanka had discussed debt restructuring options with foreign restructuring bankers. 
“A recent #media story seems to claim #SriLankan officials met some “#restructuring” bankers to resolve its “#crisis”. #SriLanka has not sought any “restructuring” assistance of its #debt &talks w/ #financiers &/or bankers have been only to discuss offers of new financing,” Cabraal tweeted.

Citing unnamed sources, Wall Street Journal (WSJ) on Wednesday reported that Sri Lankan officials met with restructuring bankers from Rothschild & Co. and Lazard Ltd to resolve the country’s foreign exchange and debt problems.

The bankers discussed the potential proposals to help the country to raise funds, including asset sales and securitised debt facilities, the report said, citing people familiar with the matter.
WSJ said Rothschild declined to comment, while Lazard and the Sri Lankan government didn’t immediately return the request for comment.

Sri Lanka has so far resisted seeking the support of the International Monetary Fund (IMF) to resolve its current economic difficulties, largely stemming from the pandemic and the sweeping tax cuts introduced by the current Rajapaksa government at the end of 2019.

Cabraal had earlier expressed confidence in restructuring the country’s debt on its own with the locally available expertise and without the backing of the IMF or any other such institution. 
Sri Lanka is currently experiencing its worst economic crisis marred by an unprecedented foreign exchange crisis and a massive foreign debt pile. The foreign exchange shortage has resulted in hours-long power outages, as power plants and petrol pumps have run dry. Sri Lanka’s foreign reserves had dwindled to US $ 2.36 billion by end of January 2022, from US $ 7.5 billion at the beginning of 2020. But some analysts said usable reserves are significantly less than that.   For this year, Sri Lanka has about US $ 6.9 billion foreign debt repayment, including the interest. The country repaid US $ 500 million sovereign bond in January and the next big repayment of a US $ 1 billion sovereign bond is scheduled in July. The Central Bank and the government have pledged that they are committed to honouring all the debt repayments that fall due.