Debt restructuring to be able to repay the loan: Central Bank of Sri Lanka

Sri Lanka will not be able to repay the loans until they are restructured, Central Bank Governor P Nandalal Warasinghe said on Thursday, calling for speedy recruitment of financial advisers and lawyers for the debt restructuring process.

Speaking to the media here, Warasinghe said that the country’s new leaders are urgently needed to stabilize the economic situation.
Opposition parties told parliament on Wednesday that the country had defaulted on an international sovereign bond payment at the end of a 30-day grace period for the first time in its history, which fell yesterday. They claim it was a hard default.

Sri Lankan Prime Minister Ranil Wickremesinghe also said on Wednesday that the country had missed a payment to the Asian Development Bank, blocking new funds amid warnings that the currency-crisis-hit country could be locked out of multilateral funding.

Sri Lanka has already suspended repayment of loans for international sovereign bonds, commercial bank loans, exim bank loans and bilateral loans. However, multilateral lenders and senior lenders were excluded.

Sri Lanka is now negotiating a loan with the IMF. The country had to pay 10 106.34 million this year but was able to pay only .4 12.4 million by April.
The Prime Minister then said that the debt-ridden country could not pay even one million dollars.

Birasinghe said the nation has declared a pre-determined default.

“What we have announced is a pre-practice default. We have declared that we are not going to pay,” he said.
“You can technically call it a hard default on a contractual basis,” Wiresinghe said.

He said on April 12 that Sri Lanka had suspended the repayment of the loan because it could not repay it.
“We have already announced that we will not be able to repay the loan until it is restructured.”

Weirsinghe said financial advisers and lawyers could be hired soon to restructure the debt.
He threatened to resign two weeks ago if he did not take action to bring about political stability.

“Now that there is a prime minister and a cabinet, it is possible to make a decision now as I said,” he said.
He said he had met the new Prime Minister Bikram Singh and hoped that the work on economic stabilization could now move forward.

Vikramasinghe told Parliament that he would present a report on the defaulters as most of the required information was missing.
Following the declaration of default, Sri Lanka has begun negotiations with the IMF for possible bail.

The IMF, however, termed Sri Lanka’s current debt as unstable and called on the government to address the problem.

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