According to Bloomberg News, global investors and Sri Lankan officials are expected to commence negotiations aimed at restructuring $12 billion in defaulted global bonds starting next week. The discussions will be led by a steering committee consisting of bondholders, who will consider a proposal from the government to restructure the overseas debt that has been in default since 2022, as reported by individuals familiar with the matter.
The objective is to expedite a deal, especially since Sri Lanka is scheduled to hold presidential elections later this year, as stated in the report.
At the time of reporting, the government had not responded to a request for comment from Reuters.
Sri Lanka disclosed a fresh debt restructuring proposal with private creditors in mid-February, as confirmed by Foreign Minister Ali Sabry in a statement to Reuters last month. The island nation anticipates attracting approximately $5 billion in foreign funds over the next two years once the restructuring of its overseas debt is finalized.
Sri Lanka defaulted on the debt in May 2022, following a severe shortage of foreign exchange reserves, leading to the country’s most significant financial crisis since gaining independence from Britain in 1948.
In March of the previous year, Sri Lanka secured a $2.9 billion bailout from the International Monetary Fund (IMF), aiding in mitigating inflation, boosting state revenue, and rebuilding foreign exchange reserves.
Despite challenges, Sri Lanka’s economy contracted by 2.3% last year, outperforming the IMF’s anticipated contraction of 3.6%.
Source – Reuters
