Sri Lanka unveils debt restructuring plan to creditors

Sri Lanka unveils debt restructuring plan to creditors

by Uditha Jayasinghe

COLOMBO (Reuters) – Sri Lankan authorities will hold formal talks with international creditors on Friday to begin the process of restructuring its billions of dollars of debt and partnership plans to tackle the island’s worst economic crisis in more than seven decades.

The success of the restructuring is critical for the country of 22 million people to secure final approval of a $2.9 billion loan from the International Monetary Fund and subsequent financing from other global agencies.

The money will help the island nation overcome acute food and fuel shortages that fueled sweeping street protests for months this year and led to the ouster of then-President Gotabaya Rajapaksa.

Sri Lanka’s finance and other officials plan to hold a virtual interactive session to share the objectives of its loan package agreed with the International Monetary Fund on September 1 and the next steps of the debt restructuring process.

It will be announced to the creditors after the event ends. The government has already held preliminary talks for restructuring with its neighbor India and diplomats based in Colombo.

“There was a very positive response from the meeting with ambassadors headed by the president on Thursday,” said an official in the president’s office, who spoke on condition of anonymity.

Sri Lanka is focused on trying to end the IMF deal by December or early next year.

Sri Lanka’s foreign currency debt stood at $47.3 billion by the end of 2021 and local currency debt at $53.6 billion, according to an update from the Finance Ministry in August. China, Japan and India are major bilateral creditors.

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Foreign currency debt includes $13 billion in international sovereign bonds held largely by private creditors, such as asset managers BlackRock (NYSE:) and Ashmore.

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