Sri Lanka announces domestic debt restructuring strategy this week: report

COLOMBO: Indebted Sri Lanka will unveil its domestic debt restructuring strategy this week as it weathers its worst financial crisis in decades, central bank governor P. Nandalal Weerasingha said on Sunday (25 June).

In a special statement, Weerasingha told a local television station that Sri Lanka was likely to receive cabinet and parliamentary approval for its debt restructuring strategy as early as this week.

The government on Friday declared a special bank holiday from June 29 to July 3 to prevent market turmoil after the announcement of a domestic debt restructuring, local TV station Ada Delana reported. An exact date for the domestic debt restructuring has not yet been officially announced.

“Continuing, the bond and economic markets should not function during the period because the information is very sensitive to the market … If these proposals are to be discussed in public, those sensitive The market will stop working,” Weerasingha said.

Sri Lanka’s economy plunged into its worst financial crisis in more than 70 years last year as foreign exchange reserves fell to record lows.

The island defaulted on its foreign debt for the first time in its history in May 2022, and last September began talks with bondholders and major creditors, including China, Japan and India, toward a debt restructuring.

Sri Lanka is working to finalize debt restructuring talks by September to meet an initial review by the International Monetary Fund (IMF) as part of a $2.9 billion bailout that has helped the economy recover in recent months.