Sri Lanka, which is in the midst of a crisis, will present its plans for a debt restructuring and a multi-billion dollar bailout from the International Monetary Fund to its international creditors on Friday.
Sri Lanka’s worst economic crisis since it gained independence from Britain in 1948 has resulted in the country defaulting on its sovereign debt as a result of years of economic mismanagement and the Covid-19 pandemic.
An online call on September 23 would be open to all of the country’s external creditors and would be “an interactive session” in which participants could ask questions, according to a statement released by the country’s Ministry of Finance via legal firm Clifford Chance.
When the then-President of Sri Lanka, Gotabaya Rajapaksa, fled the country and resigned as a result of violent public protests in July, the country’s problems reached their zenith.
Ranil Wickremesinghe, his replacement, has been successful in negotiating a preliminary agreement with the International Monetary Fund (IMF) that, if approved, would grant the nation loans totaling $2.9 billion over the course of four years.
According to the statement that was released on September 17, “authorities intend to update their external creditors on the most recent macroeconomic developments, the main objectives of the reform package agreed upon with the IMF… and the next steps of the debt restructuring process.”
Sri Lanka’s unique difficulties are cited by debt crisis veterans.
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Estimates of the country’s borrowings range from $85 billion to well over $100 billion due to their complexity. Competing regional powers China, India, and Japan must also find a way to reduce Colombo’s debt, which is perhaps the most difficult challenge.
