sri lanka: India holds debt restructuring talks with Sri Lanka

India and Sri Lanka held the first round of talks on restructuring the island nation’s bilateral sovereign debt, which is beset by an economic crisis, here last week, according to an official statement on Tuesday.

The discussions symbolize India’s support for the early completion and approval of an appropriate IMF program for Sri Lanka, which requires funding pledges from creditors to make Sri Lanka’s debt sustainable, India’s High Commission said in a statement.

Sri Lanka and the International Monetary Fund reached an interim agreement on a loan of around US$2.9 billion in early September, conditional on the country receiving funding commitments from official creditors and negotiations with private creditors.

“In response to a recent request from the Government of Sri Lanka, the High Commissioner of India in Colombo held the first round of talks with the Government of Sri Lanka on September 16, 2022 in Colombo on the restructuring of Sri Lanka’s bilateral sovereign debt to India. “, the statement said.

“India will continue to work closely with relevant Sri Lankan stakeholders,” it said.

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India’s debt restructuring talks came ahead of a virtual meeting convened by the Sri Lankan government to update all of its external creditors on the economic recovery deal agreed with the IMF on September 23.

Debt restructuring adviser Clifford Chance said Sri Lanka would make an online presentation to external creditors, updating them on the latest macroeconomic developments, the targets of the IMF package and the next steps in the debt restructuring process.

While the IMF announced its willingness to finalize a staff-level agreement in late August, it said the agreement with creditors was key to the facility.

Sri Lanka announced sovereign default for the first time in its history in mid-April before asking the IMF for a possible bailout facility.

By the end of 2021, Indian loans accounted for 2 percent of Sri Lanka’s total external debt. The Asian Development Bank with 13 percent, China and Japan with 10 percent each were the island state’s main creditors.

India has provided $4 billion in aid since early 2022, when Sri Lanka plunged into its worst economic crisis since 1948.

The country of 22 million people has been struggling with shortages of basic necessities, including fuel, food and medicines, for months after its foreign exchange reserves fell to record lows, blocked imports and fueled unprecedented public unrest.

Anti-government protests forced President Gotabaya Rajapaksa to flee the country in July. He returned to Colombo earlier this month after a new government was formed under President Ranil Wickremesinghe and anti-government protests had subsided. sri lanka: India holds debt restructuring talks with Sri Lanka

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