Sri Lanka mulls restructure of debt as country battles financial crisis

Sri Lanka mulls restructure of debt as country battles financial crisis

COLOMBO Sri Lanka is considering a restructure of its local and sovereign debt, President Ranil Wickremesinghe said on Friday, August 5 as the island nation battles its worst financial crisis in its independent history.

The country is due to restart the International Monetary Fund IIMF in August in the hope of securing US $3 billion in funding.

The government is working with its financial advisers Lazard and Clifford Chance to finalise a plan to restructure overseas debt, including about US $12 billion owed to bondholders.

Should we look at local debt? Wickremesinghe told a conference in Colombo that it has far-reaching consequences. The financial advisors are looking at both things. Sri Lanka's central bank governor said on July 7 that the country wouldn't try to restructure local debt.

The International Monetary Fund warned countries of issues relating to local debt, pointing out the impact on domestic banks.

Restructuring domestic debt is like surgery - you do it only if you must, and you avoid it if it could cause more harm than good, officials at the International Monetary Fund said in a blog post in December.

Sajith Premadasa, the leader of Sri Lanka's main opposition party, met with Wickremesinghe on Friday, who called for the formation of a unity government to help the country out of its crisis.

Premadasa wrote on Twitter that he and his team held far reaching discussions with the president.

There is a positive attitude towards joining forces for the sake of the country. Without ministerial positions, privileges and privileges, we're going to do so.