SL shares terms of debt deal with China with other creditors

Saturday, 18 November 2023 00:42 - - {{hitsCtrl.values.hits}}

Central Bank Governor Dr. Nandalal Weerasinghe has said 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.

Bloomberg quoted Weerasinghe as saying 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, he told Bloomberg in an interview in Colombo on Thursday.

Sri Lanka’s recent debt deal with Export-Import Bank of China caught the IMF and creditor nations like India by surprise, with some officials raising concerns about the lack of transparency over the agreement. China, which is Sri Lanka’s biggest bilateral lender, isn’t part of the official creditors committee.

Weerasinghe, 62, said details of the China agreement have now been shared with the creditor committee and the IMF.

“We hope the official creditors will also respond with their support so that we can go ahead with the IMF’s funding program,” he said. He didn’t disclose the terms of the China deal in the interview.

Sri Lanka is trying to reach a debt restructuring agreement with its bilateral creditors and bondholders to allow it to keep receiving funds under a $ 3 billion bailout package with the IMF. That would help to further stabilise the economy after the worst crisis in seven decades last year forced the nation to default on its debt for the first time in its history.

“We are moving in the right direction,” Weerasinghe said.

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.