Colombo:
Sri Lanka is looking at reducing its overall debt burden by about $17 billion in the ongoing debt restructuring process, Foreign Minister Ali Sabry said today, highlighting his government's efforts to maintain strong ties with key partners and creditors, including China and India . for further negotiations with the IMF.
Ali Sabry's statement comes days after visiting Japanese Foreign Minister Yoko Kamikawa said Tokyo expected cash-strapped Sri Lanka to soon sign MoUs with official creditors to reach a “transparent and comparable” debt restructuring agreement with all creditors .
Japan is leading international discussions on Sri Lanka's debt restructuring as co-chairman of the Committee of Official Creditors, after the island declared its first public debt declaration in April 2022 since independence from Britain in 1948. Gotabaya Rajapaksa, President Ranil Wickremesinghe's predecessor, will leave office in 2022.
In March, the International Monetary Fund (IMF) said it had reached a staff-level agreement with Sri Lanka for the next phase, which would give the country access to $337 million from the nearly $3 billion bailout planned for the country in 2023 was approved.
Two tranches of $330 million each were released in March and December 2023, even as the global lender praised Colombo for its macroeconomic policy reforms, which it said were “beginning to bear fruit.” Speaking to reporters here on Saturday, Sabry said Sri Lanka is looking at reducing its overall debt burden by about $17 billion under the ongoing debt restructuring process. “This benefit can manifest itself in several forms, including principal reductions, interest payments or extended repayment terms. Such restructuring efforts have the potential to reduce our debt burden by $17 billion,” Sabry said.
The current debt restructuring negotiations involve an amount of $46 billion, mainly involving private bondholders. At the same time, these efforts will pave the way for continuation of development activities in the country at the earliest opportunity, he said, adding that Prime Minister Dinesh Gunawardena's recent visit to China, where Sri Lanka signed nine MoUs with China, reflects the same .
He also expressed the government's expectations of completing the external debt restructuring process in June.
“The first phase of domestic debt restructuring has been completed, with attention now turning to external debt restructuring. Negotiations with private investors related to government bonds aim to conclude this phase in June, with a targeted completion before June 2024,” the minister added.
On the foreign policy prospects of the government, Sabry referred to the recent visit of the Japanese Foreign Minister and the visit of the Iranian President and emphasized that Sri Lanka is pursuing a 'non-aligned foreign policy' , coupled with its commitment to maintaining relations with all nations while protecting their sovereignty.
Securing the support of key partners and creditors, including the US, France, India and China, was crucial during the negotiations with the IMF. “We have made progress on debt restructuring, receiving the support of the official creditors' committee, made up of countries such as India, Japan and the Paris Club. Our goal is to complete the debt restructuring by the end of June, with the support of all major players. This includes finalizing agreements with China,” he added.
Once debt restructuring is achieved, especially external debt restructuring, India can focus on promoting economic growth through partnerships with various parties, the ministry said.
(Except for the headline, this story has not been edited by Our staff and is published from a syndicated feed.)