Debt restructuring talks with creditors progressing smoothly: CB

• Govt. hopes to complete negotiations with creditors and obtain financing assurances next month to activate IMF bailout package 

The Central Bank said debt restructuring negotiations with the bilateral creditors are progressing smoothly aligned with the government’s intentions to obtain financing assurances by next month, in order to secure the final approval for the International Monetary Fund’s (IMF) US $ 2.9 billion bailout package.

“We haven’t concluded the negotiations yet. We are in the process of completing that. Our intention is to complete the negotiations somewhere in January. Our plan and intention are to complete the negotiations and obtain financing assurances next month,” Central Bank Governor Dr. Nandalal Weerasinghe said.

He noted that the negotiations with the key creditors are unlikely to be concluded within this month as earlier anticipated. 

Sri Lanka, in early September, reached a staff-level agreement with the IMF for a US $ 2.9 billion bailout package. However, the country is required to obtain financing assurances from its external creditors to secure the IMF Executive Board approval to activate the financing. 

China, which is not a member of the Paris Club, is Sri Lanka’s largest bilateral creditor, accounting for 52 percent of its bilateral credit while Japan is the largest bilateral creditor for the country within the Paris Club.

The Paris Club creditor nations recently proposed a 10-year moratorium on Sri Lankan debt and another 15 years of debt restructuring as a formula to resolve the current financial crisis in the country. Even after securing the final approval for the IMF bailout package, Dr. Weerasinghe stressed that the country needs to prioritise reforms, as the anticipated foreign funds would only be sufficed to stimulate the economy in the short term.