By Bandula Sirimana/Business Times
Colombo, February 26: Although the total government external debt amounts to US$ 35.052 billion as at end of September 2022, only bilateral debt is considered for the debt restructuring process to release the IMF Extended Fund Facility,
The bilateral creditors including China, India, Japan and Paris club member countries have expressed their willingness to restructure their debt amounting to US$10.814 billion, sources said.
The Finance Ministry along with the Central Bank have briefed those creditors on the country’s overall debt situation, the status of the economy and the process of debt restructuring along with its modalities enabling them to extend their assurance to the IMF.
Accordingly, financing assurances from bilateral creditors are required only for their debt as a pre-requisite to the IMFs 4-year economic program for Sri Lanka and to unlock the US$ 2.9 billion loan, a senior Finance Ministry official, familiar with the procedure, told the Business Times.
Sri Lanka is confident of gaining assurances from bilateral creditors for their debt restructuring to obtain International Monetary Fund (IMF) board approval towards unlocking the US$ 2.9 billion bailout package ahead of the IMF/World Bank spring meetings in Washington in mid-April, Finance Ministry sources said
Multilateral and Commercial Debt
Multilateral debt of US$ 9.499 billion and commercial debt of US$ 14.74 billion amounting to US$ 24.239 billion will be dealt with separately, following different debt treatment procedures and this matter has no relevance for the ongoing debt restructuring process.
When asked about the US$ 12.55 billion involved in International Sovereign Bond (ISB) issuance, the source noted that this was categorized as “commercial debt’ and most of ISB’s maturity periods will fall on 2024, 2025, 2026, 2027, 2028 and 2029. Each and every ISB has different dates of maturity and varied interest rates.
The only issue at hand is the repayment of US$ 1.25 billion ISB on April 18 this year.
The government is servicing other multilateral loans including from the World Bank and ADB amounting to US$ 9.499 billion.
The Government-guaranteed debt and borrowings of the Central Bank are also a part of Sri Lanka’s total public debt.
However, Newin.Asia adds: However, at the G20 Finance Ministers’ meeting in Bengaluru, China is said to have asked the multilateral lenders to take haircuts if China is asked to take a haircut.
China has so far offered to give Sri Lanka only a two-year moratorium for repayments due to the Chinese EXIMBANK for the years 2022 and 2023. But the IMF has rejected this.