Sri Lanka making good progress in debt restructuring talks

Crisis-stricken Sri Lanka should be able to conclude newly launched debt restructuring talks by September, or November at the latest, its president said on Thursday, adding that the negotiations had made "remarkable" progress.

Sri Lanka secured a $2.9 billion bailout from the International Monetary Fund in March and has previously said it aims to complete talks on restructuring debt owed to bilateral creditors and overseas bondholders by September.

 

It was not clear whether President Ranil Wickremesinghe's comment signaled a possible delay in the process. He was speaking as he began a meeting with Japanese Prime Minister Fumio Kishida at the latter's office in Tokyo.

The two leaders affirmed the importance of adhering to transparent and fair debt restructuring, according to a summary issued by Japan.

"We have made remarkable headway as far as the debt restructuring talks are concerned," Wickremesinghe said.

 

"(We) should be able to conclude by September, or November the latest," which he said would mark an end to Sri Lanka's economic crisis.

Kishida's meeting with the Sri Lankan leader, their first since last September, is unlikely to generate a new initiative but both sides would take stock of the efforts to restructure debt, a Japanese official told Reuters.

Last month, France, India and Japan unveiled a common platform for talks among bilateral creditors to co-ordinate restructuring of the debt.

"We have now started a creditors' meeting and all for a successful conclusion before the end of 2023," the president said. "Sri Lanka is dedicated to ensure equal treatment for all creditors. We want this exercise to succeed because our experience will enable more middle-income countries to utilize the IMF in ensuring multilateral coordination for debt relief."

 

The island nation defaulted on its foreign debt for the first time in its history in April last year as the worst financial crisis since independence from Britain in 1948 crushed its economy.

The IMF called this week for timely restructuring pacts with the country's creditors. The global lender said Sri Lanka's macroeconomic situation was improving, although earlier it had predicted the economy would contract 3 percent this year.

Sri Lanka owes $7.1 billion to its creditors, with $3 billion owed to China, $1.6 billion to India and $2.4 billion to the Paris Club, a group of creditor nations.

At the meeting with Kishida, Wickremesinghe expressed regret over past relations with Japan, when Sri Lanka called off a major infrastructure deal signed with Tokyo.

The president suggested his country was now keen to restart multiple investment projects with Japan.

"We re-commence the projects that were suspended or cancelled," he said.