{"id":128731,"date":"2022-09-23T15:12:52","date_gmt":"2022-09-23T22:12:52","guid":{"rendered":"https:\/\/www.lankaweb.com\/news\/items\/?p=128731"},"modified":"2022-09-23T15:12:52","modified_gmt":"2022-09-23T22:12:52","slug":"sri-lanka-set-to-begin-talks-to-restructure-debt-of-30-bln","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2022\/09\/23\/sri-lanka-set-to-begin-talks-to-restructure-debt-of-30-bln\/","title":{"rendered":"Sri Lanka set to begin talks to restructure debt of $30 bln"},"content":{"rendered":"

Courtesy NewsIn.Asia<\/em><\/span><\/h2>\n\n\n

<\/a><\/a><\/a><\/a>Sept 23 (Reuters) \u2013 Crisis-hit Sri Lanka will begin on Friday the tricky task of debt renegotiation with a raft of private and bilateral creditors, including China, India and Japan, to restructure and repay nearly $30 billion that it owes.<\/p>\n\n\n\n

WHY THE NEED TO RESTRUCTURE DEBT?<\/h3>\n\n\n\n

Years of economic mismanagement and the fallout of the COVID-19 pandemic have pushed foreign exchange reserves to record lows in the worst economic crisis in more than seven decades.<\/p>\n\n\n\n

Sri Lanka clinched a staff-level deal in September for a $2.9-billion bailout package from the International Monetary Fund after its central bank declared a default on some foreign debt in April, saying payment was challenging and impossible\u201d. <\/p>\n\n\n\n

But the IMF will only start providing funds after the island nation of 22 million chalks out a sustainable repayment path. That in turn requires negotiation with private creditors and two-way lenders.<\/p>\n\n\n\n

The finance ministry and its legal adviser, Clifford Chance, will hold a conference call on Friday with external creditors, to outline the economic woes, debt restructuring plans and the targets set by the IMF. <\/p>\n\n\n\n

WHO ARE THE KEY PLAYERS?<\/h3>\n\n\n\n

Total foreign currency debt of $38.7 billion amounts to 48.2% of GDP, the latest IMF report showed in March.<\/p>\n\n\n\n

That includes $13 billion in international sovereign bonds held largely by private creditors, such as asset managers BlackRock (BLK.N) and Ashmore (ASHM.L).<\/p>\n\n\n\n

The Paris Club informal group of creditor nations that includes India and Japan holds $4.9 billion of Sri Lanka\u2019s debt, and China about $5 billion more.<\/p>\n\n\n\n

WHAT ARE THE POTENTIAL COMPLICATIONS?<\/h3>\n\n\n\n

Debt crisis veterans cite uniquely tough problems.<\/p>\n\n\n\n

Sri Lanka is the first middle-income country to default after the COVID-19 pandemic. It is outside the G20 framework set up to help poor countries navigate defaults. read more<\/a><\/p>\n\n\n\n

Estimates of its complex borrowings range from $85 billion to more than $100 billion.<\/p>\n\n\n\n

Foreign creditors could demand that the government also restructure $48.6 billion of domestic debt, equivalent to about 60% of GDP, potentially complicating and delaying recovery.<\/p>\n\n\n\n

Competing regional powers China, India and Japan must also find common ground on how to reduce the debt they are owed.<\/p>\n\n\n\n

WHAT IS AT STAKE?<\/h3>\n\n\n\n

If Sri Lanka is unable to get its debt restructuring on track in a timely way and lock down a IMF board level pact, it will lose out on additional financing to stabilise and reform its economy on the path to growth.<\/p>\n\n\n\n

Without a solution, more unrest could threaten, after months of hardship, brought by shortages of essential items of food, fuel and medicines and inflation that soared to 70.2% in August.<\/p>\n\n\n\n

Unprecedented street protests forced the resignation of then president Gotabaya Rajapaksa after he fled the country in July, allowing political veteran Ranil Wickremesinghe to take over.<\/p>\n","protected":false},"excerpt":{"rendered":"

Courtesy NewsIn.Asia Sept 23 (Reuters) \u2013 Crisis-hit Sri Lanka will begin on Friday the tricky task of debt renegotiation with a raft of private and bilateral creditors, including China, India and Japan, to restructure and repay nearly $30 billion that it owes. WHY THE NEED TO RESTRUCTURE DEBT? Years of economic mismanagement and the fallout […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[193],"tags":[],"class_list":["post-128731","post","type-post","status-publish","format-standard","hentry","category-imf-bailout-package"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/128731","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=128731"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/128731\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=128731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=128731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=128731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}