Sri Lanka debt restructuring stumbles as govt rejects bondholders' proposal

Apr 20, 2024 - 07:06
Apr 20, 2024 - 07:10
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Sri Lanka debt restructuring stumbles as govt rejects bondholders' proposal
Sri Lanka on Tuesday rejected international bondholders' proposal to restructure more than $12 billion in debt, putting at risk critical International Monetary Fund support and delaying its efforts to resolve a two-year-long debt crisis.
Some of the proposal's "baseline" assessments and a lack of a contingency option in the case of continued economic weakness were the two main reasons the deal was not agreed, the government said in a statement.
Colombo said it hoped to hold further talks "as soon as feasible" but the immediate risk was that without a compromise in the coming weeks, the next tranche of all-important IMF support money could potentially get delayed.
Sri Lanka has already struck a deal with its main government creditors, but an "agreement in principle" with bondholders was also needed to secure IMF Board approval for the next $337 million instalment of its $2.9 billion programme.
The government said one of the main stumbling blocks had been that the "baseline parameters" of the bondholders' plan had not matched those embedded in its IMF programme.
It added that the bondholders' "steering committee" that it has been negotiating with in recent weeks had not wanted to extend "restricted discussions" - a key part of debt talks where they are held privately, behind closed doors.

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