Sri Lanka’s next steps concerning the restricted discussions held with the Ad Hoc Group of Bondholders of its International Sovereign Bonds would entail further consultation with the International Monetary Fund (IMF) staff regarding assessments of the compatibility of the latest proposals with program parameters, State Minister of Finance Shehan Semasinghe announced.
In a statement issued on Wednesday, State Minister Semasingeh said following these consultations, Sri Lanka hopes to continue discussions with the bondholders to reach common ground ahead of the IMF board’s consideration of the second review of Sri Lanka’s EFF program.
He further emphasized that Sri Lankan authorities continue to engage in all debt restructuring negotiations in good faith, within principles of equitable treatment among creditors, and with maximum transparency within the norms of such negotiations.
It is standard practice when a representative group of bondholders is formed to entertain confidential discussions with such a group and its appointed advisors. In the case of Sri Lanka, the Ad Hoc Group of Bondholders represents holders controlling more than 50% of the bonds, which makes them a privileged interlocutor for Sri Lanka.
It is well understood that given the price-sensitive nature of the negotiations, and according to market regulations, discussions with the Group and its advisors are to be conducted under non-disclosure agreements. This evidently restricts the ability of the Government to unilaterally report about the substance of the discussions.
Commenting on the recent government statement issued on the restricted discussions held with the Ad Hoc Group of Bondholders, the State Minister said the conclusion of this first round of confidential discussions with members of the Group aims at informing the Sri Lankan people, market participants and other stakeholders about this debt restructuring exercise and the progress in negotiations. It provides the highest possible level of transparency within the internationally accepted practices in such circumstances.
As informed in this statement, confidential discussions held in recent weeks with bondholders’ representatives proved constructive, building on the restructuring proposals presented by both parties. During the talks, both sides successfully bridged a number of technical issues enabling important progress to be made.
State Minister Semasinghe added that Sri Lanka articulated key remaining concerns that need to be addressed in a satisfactory manner.
His comments come, after the opposition, Samagi Jana Balawegaya (SJB) expressed disappointment over the government’s lack of transparency related to the restricted discussions held with the Ad Hoc Group of Bondholders of its International Sovereign Bonds (ISBs).
The SJB had expressed disappointment after the government, in a statement Tuesday, announced that it has held restricted discussions over the past three weeks (the “Restricted Period”) with nine members of the steering committee who agreed to take part in the restricted discussions (the “Steering Committee”) of the Ad Hoc Group of Bondholders (the “Group”, and together with Sri Lanka, the “Parties”) of its International Sovereign Bonds (ISBs).
The statement further said that despite constructive discussions, the Parties did not agree on restructuring terms, while the Steering Committee did not agree to an extension of the restricted discussions upon expiration of the current Restricted Period. (Newswire)
