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Sri Lanka and  bondholders go for second round of debt talks this month 

Global investors and Sri Lanka officials expect to hold a second round of talks aimed at restructuring US $12 billion in defaulted International Sovereign Bonds later this month, according to informed official sources 

A group of bondholders, known as a steering committee, and government representatives came away from a first round of negotiations in Europe in late March without a deal.

They plan to continue the discussions around the International Monetary Fund’s spring meetings in Washington DC, which start April 15, said the people, who asked not to be identified as the discussions are private. They didn’t disclose details of the proposal that’s under consideration. 

A deal with private investors is among the last steps in Sri Lanka’s plan to overhaul $27 billion of foreign debt, including bonds and loans.

 The restructuring is critical to ensure financing from the IMF bailout keeps flowing. The government has already struck deals with official creditors, including China, India and the Paris Club as well as with holders of its local debt

Sri Lanka officials expect to hold a second round of talks aimed at restructuring $12 billion in defaulted global bonds later this month, according to official sources  

The International Monetary Fund (IMF) says there is a strong expectation that agreements with commercial creditors consistent with program parameters will be reached by the completion of Sri Lanka’s second review.

Addressing the IMF’s press briefing, Director of the Communications Department Julie Kozak said the next steps on the debt restructuring are to conclude the negotiations with external commercial creditors and to implement agreements in principle with official creditors.  

Julie Kozak further said that the domestic debt operations part of the debt restructuring, are largely completed.

“Completion of the review by the Executive Board requires, first, the implementation of the prior actions that have been agreed and second, completion of what we call financing assurances review. That review would need to confirm that multilateral partners are continuing their financing contributions to Sri Lanka, and it will also assess progress with debt restructuring and will need to conclude that adequate progress is being made,” she said. 

Julie Kozak also pointed out that macroeconomic policy reforms in Sri Lanka are starting to bear fruit. 

“Commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth while preserving the stability of the financial system.  Public finances have strengthened following substantial fiscal reforms, and it is critical that this reform momentum be continued,” she added.

Julie Kozak made the remarks in response to a question raised regarding an update on the debt restructuring process, including with China state creditors

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