Exclusive: Paris Club to give Sri Lanka financing assurances amid IMF debt talks - sources

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LONDON, Feb 2 (Reuters) - The Paris Club of creditor nations is ready to provide financing assurances to Sri Lanka, a key step needed to unlock a $2.9 billion bailout by the International Monetary Fund (IMF), two sources with direct knowledge of the matter told Reuters.

The informal group of bilateral lenders is set to "soon" announce its support to the crisis-hit nation on a debt overhaul, said one of the people, who asked not to be named because talks are private.

The Asian island nation, which is grappling with soaring inflation, a recession and currency depreciation, entered into a staff level agreement with the IMF last September.

But it needs financing assurances from key bilateral lenders before the fund's executive board approves the programme.

Sri Lanka's public debt stood at 122% of GDP, of which 70% is denominated in foreign currency, according to data in a country presentation to investors in November.

China and India, both non-Paris Club members, are the top bilateral lenders. "Paris Club assurance is not reliant on China," said the source.

Another source said the informal group is currently reaching out to other non-Paris Club besides China on financing assurances, but did not provide any further details.

India previously committed to help ease the debt burden of neighbour Sri Lanka as part of the IMF programme, and China's Eximbank offered a two-year moratorium in a letter sent to the island nation in January.

While the IMF has not yet provided any guidance on where the lender stands regarding China's assurances to Sri Lanka, a U.S. official visiting Colombo said on Wednesday that Beijing has not done enough.

"What China has offered so far is not enough. We need to see credible and specific assurances that they will meet the IMF standard of debt relief," U.S. Under Secretary of State for Political Affairs Victoria Nuland told reporters. The U.S. is the largest IMF member.

- https://www.reuters.com/markets/asi...ances-amid-imf-debt-talks-sources-2023-02-02/

ලංකාවට දුන් ණය ප්‍රතිව්‍යුහගත කරන්න පැරිස් සමාජය තීන්දු කරයි!​

ජාත්‍යන්තර මූල්‍ය අරමුදලින් ලබා ගැනීමට අපේක්ෂා කරන ඩොලර් බිලියන 2.9 ක විස්තීරණ මූල්‍ය පහසුකම ලබා ගැනීමට අදාළ ණය ප්‍රතිව්‍යුහගත කිරීමට සහය පැරිස් සමාජය නියෝජනය කරන ණය දෙන රටවල් ශ්‍රී ලංකාවට සහතික වී ඇති බව රොයිටර් පුවත් සේවය වාර්තා කරයි.​

මෙම ක්‍රියාවලියට සම්බන්ධ මූලාශ්‍ර දෙකක් පදනම් කර ගනිමින්, ඒ බව වාර්තා කරන රොයිටර් පුවත් සේවය, මේ පිළිබඳව එම රටවල් නුදුරේදීම නිල වශයෙන් නිවේදනය කිරීමට නියමිත බව සඳහන් කරයි.

ඕස්ටේ්‍රලියාව, ඔස්ට්‍රියාව, බෙල්ජියම, බ්‍රසීලය, කැනඩාව, ඩෙන්මාර්කය, ෆින්ලන්තය, ජර්මනිය, අයර්ලන්තය, ඊශ්‍රායලය, ඉතාලිය, ජපානය, නෙදර්ලන්තය, දකුණු කොරියාව, ස්පාඤ්ඤය, ස්වීඩනය, ස්විට්සර්ලන්තය, ඇමරිකාව හා ප්‍රංශය මෙම පැරිස් සමාජයේ රටවල් නියෝජනය කරයි.

කෙසේ වුවද, ශ්‍රී ලංකාවේ, ප්‍රධානතම ද්විපාර්ශවික ණය හිමිකවරුන් වන්නේ, චීනය හා ඉන්දියාවවන අතර ඉන්දියාව සිය සහයෝගය මේ වන විට ප්‍රකාශ කර ඇතත් චීනය තවමත් ශ්‍රී ලංකාවේ ණය ප්‍රතිව්‍යුහගතකරණය පිළිබඳ සහතිකයක් ලබා දී නැත.

- https://lankasara.com/si/පුවත්/ලංකාවට-දුන්-ණය-ප්රතිව්/

 

[kinkon]

Good!

 

[monson]

Sri Lanka bondholders ready for debt restructuring talks​

02/03/2023 | 02:46am EST


Feb 3 (Reuters) - Private international bondholders are ready to hold debt restructuring talks with Sri Lanka consistent with the parameters and targets set out in the International Monetary Fund's programme, their legal adviser said on Friday.
Global investment companies Amundi Asset Management, BlackRock, HBK Capital Management, Morgan Stanley Investment Management and T. Rowe Price Associates Inc. are among the group of around 30 bondholders being advised by White & Case LLP, a New York based law firm.
The combination of the pandemic, which ruined the tourist sector, the Ukraine war, which drove up the price of imported fuel and food, and economic mismanagement pitched the Indian Ocean island of 22 million people into its worst financial crisis in more than seven decades. And having run out of foreign currency to pay for basic imports, Sri Lanka defaulted on its foreign debt in May.

It secured a preliminary deal on a $2.9 billion extended fund facility with the IMF on Sept. 1, though no funds have been disbursed as yet.
The government has received financing assurances from key bilateral lender India, and it is also seeking assurances from the Paris Club of creditor nations, while China's export-import bank has offered two-year moratorium on debt repayments.
The IMF is likely to begin disbursing funds once all of those assurances are in place, analysts say.
Sri Lanka has to restructure debt payments on about $11 billion in bonds. And it has also sought assurances from private creditors.
"The Bondholder Group ... stands ready to engage quickly and effectively with the Sri Lankan authorities to design and implement restructuring terms that would help Sri Lanka restore debt sustainability and allow the country to re-gain access to the international capital markets during the IMF Programme period," White & Case said in a statement.
Bondholders have also called for Sri Lanka's domestic debt to be "reorganised in a manner that both ensures debt sustainability and safeguards financial stability," the statement said.
They also requested the opportunity to express their views on the "overall design" of the IMF program, it added.
"The bondholders appear to be indirectly seeking a domestic debt restructuring, which Sri Lanka is yet to agree to," said Udeeshan Jonas chief strategist at CAL Group.
"The requirement seems to be more tilted towards reprofiling the domestic debt through maturity extensions rather for coupon or principal haircuts to bring down Sri Lanka's overall gross financing needs."
Sri Lanka secured financing assurances from India last month. The Paris Club, which includes Japan as a second major lender to Sri Lanka, is also expected to give its assurances to the IMF "soon".
The United States wants China and other creditors to provide credible and specific assurances to the IMF to help Sri Lanka unlock the bailout, a senior official said this week.
Offering a two-year moratorium on debt repayments, the Export-Import Bank of China said it would support Sri Lanka's efforts to secure an IMF programme. (Reporting by Akriti Sharma in Bengaluru; Editing by Muralikumar Anantharaman, Tom Hogue and Simon Cameron-Moore)

- https://www.marketscreener.com/news...ready-for-debt-restructuring-talks--42886620/

China confirms offer of two-year moratorium to Sri Lanka on loan repayments​

Beijing, China Edited By: PrishaUpdated: Feb 03, 2023, 06:27 PM IST

The government of China on Friday confirmed that a two-year moratorium is being offered to Sri Lanka on loan repayments as the island nation battles to restructure $51 billion in foreign debt amid the financial crisis.

The loan was provided by China to Sri Lanka under the multibillion-dollar Belt and Road Initiative programme of Beijing aimed at increasing trade through the construction of ports and other infrastructure across Africa and Asia.
A $2.9 billion emergency loan was offered by the International Monetary Fund but was asking other creditors to cut debts which were resisted by Beijing because they feared other borrowers would demand similar reliefs.

Foreign ministry spokesperson Mao Ning said that Beijing presented a plan to “provide an extension on debt service due in 2022 and 2023." “During that period, Sri Lanka would not have to pay the principal and interest due on bank loans," he added.
China is the third-biggest creditor of Sri Lanka after Japan and the Asian Development Bank, which accounts for around 10% of its debt. However, the final settlement was blocked by its lack of agreement.
The loans provided by China have been used by Sri Lanka for building an airport as well as other projects, which lacked funds.
Last month India announced that it gave assurance to IMF to facilitate a bailout plan. Sri Lanka was given $4.4 billion by India as emergency credit.

In April last year, Sri Lanka's foreign currency was depleted which led to power cuts, food shortages and a breakout of massive protests ousting the then-president and the prime minister.
Debt repayment to Japan, China and other foreign lenders was also suspended.
The government of Sri Lanka is currently cutting spending and has announced the reduction of the 200,000-member military by almost half by 2030.
(With inputs from agencies)

- https://www.wionews.com/south-asia/...torium-to-sri-lanka-on-loan-repayments-558581