Sri Lanka considering restructure of local and sovereign debt: President

Sri Lanka considering restructure of local and sovereign debt: President

COLOMBO : Sri Lanka is considering a restructure of local and sovereign debt, President Ranil Wickremesinghe said on Friday (Aug 5), as the island nation battles its worst financial crisis in its independent history.

The country is due to restart bailout talks with the International Monetary Fund (IMF) in August in the hope of securing US$3 billion in funding.

The government is working with its financial and legal advisers Lazard and Clifford Chance to finalise a plan to restructure overseas debt, including about US$12 billion owed to bondholders.

“Have we got to look at local debt? That has far-reaching consequences,” Wickremesinghe told a conference in Colombo. “The financial advisors are looking at both things.”

Sri Lanka’s central bank governor said on Jul 7 the country would not seek to restructure local debt.

The IMF has also previously warned countries of issues restructuring local debt, pointing to the impact on domestic banks.

“Restructuring domestic debt is like surgery – you only do it if you must, and you avoid it if it might do more harm than good,” officials at the IMF said in a blog post in December.

Sajith Premadasa, leader of Sri Lanka’s main opposition party, on Friday met with Wickremesinghe, who earlier this week reiterated a call for the formation of a unity government to help the country out of its crisis.

“Held far reaching discussions with the president together with my team,” Premadasa wrote on Twitter.

“Positive about joining forces for the sake of the country. Shall do so without ministerial positions, perks and privileges.”

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