Sri Lanka has been informed that a debt-restructuring agreement with creditor nations has been reached, it was reported. 

According to Reuters, a government source said, however, Sri Lanka is yet to receive a letter of confirmation from the official creditor committee.

“Sri Lanka has been informed of an agreement. It is confirmed that an agreement has been reached with bilateral lenders but we are still waiting on an official letter. We expect it soon,” the source, who did not want to be identified, said. 

Japan co-chairs the official creditor committee, together with France and India. China is Sri Lanka’s largest bilateral creditor and is an observer in the group, steering clear of joining the group as a formal member.

Sri Lanka, mired in its worst financial crisis in decades, has been trying to reach restructuring deals with creditors since last year, having been forced to default on its foreign debt in May 2022 after its foreign exchange dwindled to record lows.

The agreement with the group of creditor nations comes about a month after the heavily indebted island nation reached a deal with the Export-Import Bank of China (EXIM) covering about $4.2 billion of outstanding debt.

The EXIM deal will help Sri Lanka clear the first review of an International Monetary Fund (MF) bailout, and secure a second IMF tranche of about $334 million, the country’s finance ministry had said.

Sri Lanka’s total external debt is estimated at $36.6 billion, which includes $10.94 billion of bilateral debt, according to the latest data released by its finance ministry.

The country also needs to reach an agreement with bondholders who hold the bulk of the island’s $12.5 billion worth of international sovereign bonds. (NewsWire)

The post SL reaches debt restructuring deal with creditor nations – Reuters appeared first on Newswire.

Sri Lanka’s creditor nations will meet today for their first meeting to coordinate debt restructuring within the new framework launched in Washington D.C. in April, it was reported

According to Reuters, as Sri Lanka’s creditor nations prepare for their first meeting on Tuesday to coordinate debt restructuring, the focus is turning to whether China will attend.

The meeting, within a new framework launched in Washington D.C. in April that creditors hope will serve as a model to resolve the debt difficulties of middle-income economies, is to be held online.

Japan, which initiated the launch together with India and France, has invited all bilateral creditors, including the largest, China, though Japanese officials said it was uncertain whether it would join the talks.

The reason was not immediately clear, although one of the officials felt Beijing could be weighing the merit of participation.

Last month France, India and Japan unveiled a common platform for talks among bilateral creditors to coordinate the restructuring of Sri Lanka’s debt.

Sri Lanka owes $7.1 billion to bilateral creditors, government data show, with $3 billion owed to China, followed by $2.4 billion to the Paris Club and $1.6 billion to India.

The government also needs to renegotiate more than $12 billion of debt in Eurobonds with overseas private creditors, and $2.7 billion on other commercial loans.

Sri Lanka has kicked off talks to rework part of its domestic debt and aims to finalise the deal by May. (NewsWire)

The post Debt restructuring : Sri Lanka’s creditor nations to meet online appeared first on Newswire.

The International Monetary Fund (IMF) says its approval for a $2.9 billion loan to bail out crisis-riddled Sri Lanka will depend on the island nation securing assurances on debt relief from its bilateral creditors, Bloomberg reported.

“Sri Lanka continues to engage with official bilateral creditors to obtain financing assurances and also continues to advance domestic reforms,” an IMF spokesperson said in a statement on the progress of its Extended Fund Facility to the South Asian nation. 

“As soon as adequate assurances are obtained and remaining requirements are met, including by the Sri Lankan authorities, the EFF arrangement for Sri Lanka can be presented to the IMF’s Executive Board for approval,” the IMF spokesperson added.

The Paris Club – an informal group of rich western creditors — and India have provided formal support to the multilateral lender for the loan recast, leaving China — Sri Lanka’s biggest lender — as a holdout. China, which accounts for about 52% of the bankrupt nation’s bilateral debt, has instead offered term extensions while urging others to adopt a similar approach.

Sri Lanka IMF deal stalls amid China-World Bank relief split

Access to funds will boost foreign-currency reserves that are barely above $2 billion and help the nation curb sky-high inflation, steering its $81 billion economy toward recovery after facing the worst recession since independence.

Sri Lanka has about $50 billion in foreign currency debt, of which about $10 billion is mainly split between China, Japan and India, according to government data as of December. (NewsWire)

The post IMF reveals Sri Lanka’s current status on unlocking billion 2.9 bailout appeared first on Newswire.