September, 22, 2022
Bloomberg - Sri Lanka will ensure equity among its creditors, according to people with knowledge of the matter, as authorities prepare to share their plan to restructure debt and unlock a $2.9 billion loan from the International Monetary Fund.
The South Asian nation’s Finance Ministry will hold a virtual presentation for external creditors at 8 a.m. in New York on Friday. This will be the start of a consensus-building exercise, one of the people said, asking not to be identified before the formal outreach.
The move is complicated by the fact that the bankrupt nation has about $50 billion in foreign currency debt -- about half its total holdings of public debt -- of which some $10 billion is mainly split between China, Japan and India, according to government data as of December. The IMF, which on Sept. 1 struck a preliminary $2.9 billion loan deal, has said Sri Lanka needs to secure financing assurances from its creditors to restore debt sustainability and make “a good faith effort” to reach a collaborative agreement with private creditors in order to tap its funds.
Spokesmen for the Finance Ministry were unreachable for comment. A central bank representative declined to comment.
India, which said on Tuesday that it has begun bilateral talks with Sri Lanka on debt restructuring, has in the past urged the IMF to treat all of Sri Lanka’s creditors on par. Japan has asked all Sri Lanka’s creditors to discuss the debt restructuring. China has said it is ready to work with relevant countries and international financial institutions.
Global funds, that hold defaulted Sri Lankan federal bonds with a face value of about $12.6 billion, have been looking for clues on how much relief the nation’s biggest bilateral creditors grant the island.