Wednesday, November 29, 2023

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SL shares terms of debt deal with China with other creditors

By: Staff Writer

Colombo (LNW): The Government has shared the terms of a $ 4.2 billion China debt deal with other creditors — a key sticking point with countries like India — paving the way for more loans from the International Monetary Fund.

This was confirmed by Central Bank Governor Dr. Nandalal Weerasinghe adding that he hopes the official creditors committee, which is led by Japan, India and the Paris Club of nations, will now propose an agreement to restructure Sri Lanka’s debt.

He expects that will allow the IMF to approve a payout of $ 330 million before the end of the year.

The indicative terms agreed with China Exim Bank will provide the necessary fiscal space for Sri Lanka to implement its ambitious reform agenda.

The Government commends the engagement and continuous support of China Exim bank in reaching this agreement in principle, which demonstrates a mutual commitment in line with the goal/objective of restoring public debt sustainability consistent with the IMF-supported program.

The Sri Lankan authorities hope that this landmark achievement will provide an anchor to their ongoing engagement with the Official Creditor Committee and commercial creditors, including the bondholders.

It should also facilitate approval by the IMF Executive Board of the first review of the IMF-supported program in the coming weeks, allowing for the next tranche of IMF financing of about US$334 million to be disbursed.

The Secretary to the Treasury K M Mahinda Siriwardana said “the agreement marked a big step for Sri Lanka as we reach this landmark agreement in principle on debt treatment terms with our largest single creditor.

This agreement constitutes a key milestone in Sri Lanka’s ongoing efforts to foster its economic recovery.”

The Sri Lankan authorities and China Exim bank will actively work on formalizing and implementing the agreed parameters of the debt treatment. with China Exim Bank agreed to provide the necessary fiscal space for Sri Lanka to implement its ambitious reform agenda.

Sri Lanka has also received a debt restructuring proposal from a group of dollar bondholders, which didn’t get the backing of the Government.

Weerasinghe said the authorities continue to engage with commercial lenders, who may also be waiting to assess the debt proposal from bilateral creditors.

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