Sri Lanka’s new government said Tuesday (October 1, 2024) it would “review” a $12.5 billion sovereign bond debt restructure deal announced last month as part of efforts to repair the nation’s ruined finances.
Restructuring the debt is a cornerstone of the International Monetary Fund rescue plan Sri Lanka agreed to last year after an unprecedented economic crisis.
Former president Ranil Wickremesinghe had unveiled an agreement with international bondholders, the largest component of the government’s foreign debt, just days before he lost office in an election last month. But new foreign minister Vijitha Herath said the new administration was still weighing whether to proceed with it.
“We will review the debt restructure agreement the previous government announced,” Mr. Herath said.
Mr. Herath said an IMF team would visit Colombo on Wednesday (October 2, 2024) to meet members of new leftist President Anura Kumara Dissanayake’s team.
The IMF delegation’s meeting was a “courtesy call” and substantive negotiations will commence later this month in the United States, he added.
Sri Lanka defaulted on its $46 billion foreign debt in April 2022 after the country ran out of foreign exchange, sparking months of acute food, fuel and medicine shortages.
Mr. Dissanayake, an avowed Marxist, had criticised Mr. Wickremesinghe during the campaign for not securing better deals with international creditors and vowed to renegotiate if elected.
Last month’s tentative deal had seen bondholders agree to a 27% haircut on their loans.
Published - October 02, 2024 11:41 am IST
