Sri Lanka’s central bank on Thursday said the country had not sought any “restructuring” assistance for its debt, amid a worsening economic crisis which has seen essential imports stalled due to a lack of foreign exchange.
Central Bank Governor Ajith Nivard Cabraal wrote on Twitter that talks with financiers and bankers had only covered offers of new financing, after a media report had said that officials met with “restructuring” bankers.
Sri Lanka’s reserves dipped to $2.36 billion at the end of January, down from $7.5 billion in early 2020. But the island has about $4 billion of debt to repay or roll over this year, including a $1 billion international sovereign bond maturing in July.
Its severe shortage of foreign exchange has resulted in delays of essential imports including fuel, medicines and some food items.
In recent days, Sri Lankans have had to deal with long lines at fuel stations and widespread power cuts, which are scheduled to last for more than five hours on Friday.
Already struggling to pay for fuel imports, Sri Lanka will be further hit by rising oil prices, which have broken above $100 a barrel for the first time since 2014 after Russia invaded Ukraine.
The Central Bank of Sri Lanka (CBSL) yesterday (24) provided clarification on the reports circulated by foreign media agencies that the Government of Sri Lanka (GoSL) had commenced talks with debt restructuring advisors from Rothschild & Co. and Lazard Ltd. and stated that the GoSL did not seek assistance from any bankers or financial advisers in the restructuring of its debt and that any discussions carried out were only limited to offers of new financing.
This clarification was provided by CBSL Governor Ajith Nivard Cabraal on his official Twitter handle, where he stated: “A recent media story seems to claim Sri Lankan officials met some ‘restructuring’ bankers to resolve its ‘crisis’. Sri Lanka has not sought any ‘restructuring’ assistance of its debt and talks with financiers and/or bankers have been only to discuss offers of new financing.”
The media report in question was published in The Wall Street Journal and claimed that the GoSL had carried out discussions with bankers from Rothschild & Co. and Lazard Ltd. regarding plans to address the debt and foreign exchange crisis of the country.
According to The Wall Street Journal, such discussions included potential proposals to help the country raise cash, which includes sale of assets and securitisation of debt facilities. Sri Lanka’s foreign currency-denominated debt has been identified by economists, government critics, and foreign rating agencies as unsustainable
