Discussions with bondholders have failed again for the second time.
Posted on April 20th, 2024
Dilrook Kannangara
Will this be the end of the IMF program?
Before this SL had 16 IMF programs – all failed half way through the program!
Bond holders own 50% of foreign loans and these are the loans with highest interest rates and administration fees. A debt restructure without them is like a wedding without the groom.
Bond holders demanded more money on top of existing massive interest rates! They now want the interest rate linked to SL’s GDP growth! When the SL grows, the interest rate should also grow! But if the SL economy slows, they don’t want their interest rates to fall. This is Shylock+++++.
As I said many times since 2020, SL cannot repay bond loans. No chance. Just default them. They are loan sharks. No one knows what happened to that money. Ask them to get it from Basil, Mahinda, Ranil, Gota, etc.
Bad news – SL can’t borrow from them again. Excellent. SL survived without them until 2007.
Nothing else will happen because all bilateral loans and foreign bank loans will be paid. SL already have agreements with them.
Hope all future discussions with bond holders will FAIL!