Sri Lanka to start restructuring talks with investors next week, Bloomberg News reports

By Thomson Reuters Mar 20, 2024 | 4:20 PM

(Reuters) – Global investors and Sri Lankan officials expect to start negotiations aimed at restructuring $12 billion in defaulted global bonds next week, Bloomberg News reported on Thursday.

A steering committee, comprising of bondholders, will begin talks as they weigh a proposal from the government to rework the overseas debt that has been in default since 2022, the report said citing people familiar with the matter.

The aim is to expedite a deal, particularly since Sri Lanka is due to hold presidential elections later this year, the report added.

The government did not immediately respond to a Reuters request for a comment.

Sri Lanka said it had shared a fresh debt restructuring proposal with private creditors in mid-February.

Foreign Minister Ali Sabry last month told Reuters that the island nation anticipates attracting approximately $5 billion in foreign funds over the next two years once the restructuring of its overseas debt is finalized.

The nation defaulted on the debt in May 2022, following a severe shortage of foreign exchange reserves, which triggered the country’s worst financial crisis since gaining independence from Britain in 1948.

In March last year, Sri Lanka secured a $2.9 billion bailout from the International Monetary Fund (IMF), helping to temper inflation, increase state revenue and rebuild foreign exchange reserves.

Sri Lanka’s economy shrank 2.3% last year, which was better than the 3.6% contraction expected by the IMF.

(Reporting by Nilutpal Timsina in Bengaluru; Editing by Chris Reese and Deepa Babington)