AFP: Cash-strapped Sri Lanka is seeking a 10-year moratorium on its foreign debt, President Ranil Wickremesinghe’s office said yesterday on the eve of a desperately needed US $ 2.9 billion International Monetary Fund (IMF) bailout.
Wickremesinghe’s office quoted him as saying the widely expected IMF rescue “will only give us a breathing space where they will say we are no longer bankrupt”.
“All the money we have to repay this year, I hope we will be given at least 10 more years to repay it,” Wickremesinghe told a meeting of students in Colombo on Sunday.
He did not give details of his plans to restructure Sri Lanka’s US $ 46 billion external debt.
Sri Lanka defaulted on its foreign debt in April 2022 as the country plunged into its worst economic crisis, running out of cash to finance even the most essential imports and causing massive social unrest.
Widespread protests over economic mismanagement, acute shortages of food, fuel and medicines and runaway inflation forced Wickremesinghe’s predecessor Gotabaya Rajapaksa to flee the country and resign in July.
The IMF’s executive board was expected to sign off on Colombo’s bailout application later yesterday after a long delay in securing financial assurances from China, Sri Lanka’s largest bilateral lender.
Beijing had said this year it was offering a two-year moratorium on its loans to Sri Lanka but the concession fell short of the IMF expectations for the sustainability of the island’s debt.
Wickremesinghe had said after China agreed to restructure its loans that he expected the first tranche of the US $ 2.9 billion IMF package would be made available within the month.
Officials involved in the negotiations said the terms of debt restructuring must be finalised and agreed by all parties before June, when the IMF was expected to review the bailout programme.
“Sri Lanka will not be able to draw down the second tranche unless a debt restructuring plan is agreed with all creditors,” said one of the officials, who asked not to be identified.
Colombo is also banking on the IMF deal to unfreeze billions of dollars in foreign aid for projects suspended since Sri Lanka defaulted on its loans last year.
The government has already doubled taxes, increased energy tariffs threefold and slashed subsidies in an effort to meet the preconditions of the IMF bailout.
The austerity measures have sparked widespread protests and led to strikes that crippled the health and logistics sectors last week.
Wickremesinghe has said he had no alternative but to go with an IMF programme.
Sri Lanka’s economy shrank by a record 7.8 percent last year, as it grappled with its worst foreign exchange crisis since independence from Britain in 1948.
Mizaru Tuesday, 21 March 2023 08:00 AM
A ten year debt moratorium foreign debt from all from the lenders. This includes the sovereign bonds. A ten years the value of money will depreciate to near nothing. This man is a clown and no one will agree to this proposal;.
lester Tuesday, 21 March 2023 08:13 AM
Great. They will ask for compounded interest for 10 years. Ranil should pay that from this own pocket.
Please walk down Petteh streets Tuesday, 21 March 2023 08:31 AM
It is nothing but a joke, that we have to import petty items from China. We import even men and women's under wear, small nets for aquariums, toys, clothes and plastic items as if they need special skill to manufacture. Shady businessmen import them. Let us have a control on imports.
Eper Tuesday, 21 March 2023 10:21 AM
We had a 30 year war tsunami Easter bombings covid 19 and never fell into such a desperate crisis as experienced after Nov 2019. If proper accountability and strict non politicized Justice is not practiced, please be assured that all our selfish politicians will strip the future the poor citizens of this beautiful country
He who shall not be named Tuesday, 21 March 2023 08:45 PM
So for the next 10 years the ones who robbed the country are not going to payback debts ? Go their last 10 years of life accumulating some more on the behalf of others and then they die and we have to pay up huh? Insane how people truly fall for this talk..
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