By Charumini de Silva

Cabinet Co-Spokesman and Minister Bandula Gunawardena

The Cabinet of Ministers at its meeting on Monday has approved hiring a debt restructuring rating recognition agent and a communication agent for the external debt restructuring program.

The proposal to this effect was submitted by Prime Minister Ranil Wickremasinghe in his capacity as the Finance Minister. 

“To overcome the external debts, we need the assistance of the foreign expertise, as it is a complex international affair,” Cabinet Co-Spokesman and Minister Bandula Gunawardena said at the post-Cabinet meeting media briefing yesterday.

He said the new agents are in addition to the already appointed Lazard Institute of France and Clifford Chance LLP Institute, but was a recommendation by them.

On 12 April, Sri Lanka announced a pre-emptive negotiated default of all external debt as of that date after it was realised the status was not sustainable. As of the end of last year, Sri Lanka’s external debt amounted to $ 51 billion, whilst the figure is likely to have ballooned following the sharp depreciation of the rupee.  

The bulk (35%) of the external debt is the expensive International Sovereign Bonds whilst the rest is held by what CBSL Governor described as the Paris Club members (including Japan, UK, US, Germany) and non-Paris Club creditors (including China and India). The exact debt component to be restructured has not been quantified yet.

“From 2004 to 2014 the total sovereign bonds issued was $ 5.5 billion, but during the four years of 2015 to 2019, the Government issued bonds worth $ 12.05 b sovereign bonds. These have been traded among many international markets such as the US, Germany, UK, and France. Tracing these bonds is going to be a tedious and complex task,” Gunawardena added.

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