India’s response to debt restructuring request expected by Jan end: SL

President Ranil Wickremesinghe has said that India’s response to cash-strapped Sri Lanka’s request for debt restructuring is expected by the end of this month.

Sri Lanka, which is trying to secure a USD 2.9 billion bridge loan from the International Monetary Fund (IMF), has been trying to to get financial assurances from its major creditors — China, Japan and India — which is the requisite for Colombo to get the bailout package.

Talking to the media, Wickremesinghe on Friday also said that he is hopeful of obtaining the USD 2.9 billion IMF facility in the first quarter of this year.

Sri Lanka had begun debt restructuring talks with its creditors since September last year as warranted by its agreement with the IMF for the USD 2.9 billion facility over four years.

The cash-strapped country began negotiating with the IMF for a bail-out after having announced its first-ever sovereign debt default in April last year.

Wickremesinghe had earlier said that India and Sri Lanka held “successful” talks on debt restructuring and the country will also begin discussions with China.

The IMF bailout has been put on a halt as Sri Lanka pursues talks with creditors to meet the global lender’s condition for the facility.

Wickremesinghe said Sri Lanka was only looking from China to extend the period of repayment of Chinese loans over a period of 20 years and Sri Lanka did not ask China to slash its debt.

Sri Lanka was hit by an unprecedented financial crisis in 2022 due to a severe paucity of foreign exchange reserves that also sparked political turmoil in the country which led to the ouster of the all-powerful Rajapaksa family.

The IMF facility would enable the island nation to obtain bridging finance from markets and other lending institutions such as the ADB and the World Bank.

Referring to his tough economic measures such as tax increases, Wickremesinghe said such measures would help stabilise the economy although it would provide people hardships.

Wickremesinghe was intent on selling the state-owned enterprises to boost reserves. The government had already made clear its plans to privatise Sri Lanka Telecom and Sri Lankan Airlines.

Indian credit lines from the beginning of 2022 assisted imports of fuel and assistance. (Business Standard)