The Sri Lanka Treasury states that the Government of Sri Lanka is awaiting advice from its legal and financial advisors. The International Monetary Fund (IMF) has urged Sri Lanka to commence discussions on restructuring its debt with bilateral lender China.
The senior official stated that the government had already appointed financial and legal advisors to assist with debt restructuring, and that they were looking into various options for the government to consider. According to a senior official in the Attorney General’s Department, their responsibility is to investigate the situation and the Government’s debt profile.
Following approval from the Attorney General’s Department, representatives from Lazard Ltd. and Clifford Chance LLP, international legal and financial advisory firms based in France and the United Kingdom, respectively, arrived in the country in June.
According to Institute of International Finance (IFF) statistics, Sri Lanka owes China approximately $ 6.5 billion in financing, including development bank loans and a swap. The government will engage with all creditors “in a transparent manner and on an equal treatment basis,” an IMF official said.
The senior Treasury official responded that GoSL had begun debt restructuring discussions with China: “We have not specifically started such discussions [with China], but we have regular discussions with all lending parties.”
The official went on to say that the IMF had already told the country that debt restructuring was necessary because the country’s debt was unsustainable.
Masahiro Nozaki, the IMF’s Sri Lanka Mission Chief, stated in April that an IMF-supported programme was required to resolve Sri Lanka’s acute balance of payments problem, which could put the country’s economy back on a “sustainable” growth path as soon as possible.
Srinivasan also stated in a Reuters interview last Tuesday, “Sri Lanka must engage with its creditors – both private and official bilateral – on a debt workout to ensure debt sustainability is restored.”