Cabinet Spokesman rules out domestic debt restructuring

Wednesday, 24 August 2022 00:30 - - {{hitsCtrl.values.hits}}

Minister Bandula Gunawardena assures policy alignment on measures to overcome economic crisis
Reiterates Govt. policy remains to restructure external debt only

The Government yesterday ruled out the restructuring of domestic debt, assuring policy alignment between the administration and the Central Bank on the ongoing measures to overcome the worst economic crisis.

“The Government has not decided yet to restructure domestic debt,” Cabinet Co-Spokesman and Minister Bandula Gunawardena said in response to a query posed by journalists at the post-Cabinet meeting media briefing yesterday.

The assurance by the Cabinet Co-Spokesman will further ease off concerns as well as debate within and outside the banking sector after President Ranil Wickremesinghe recently said domestic debt stock was serious and needs to be restructured as well and that external consultants were looking into it.

Gunawardena reiterated that the Government policy remains to restructure external debt with the support of foreign financial and legal consultants.

Last week, Central Bank Governor Dr. Nandalal Weerasinghe too denied claims on the restructuring of domestic debt, whilst assured ongoing measures will ensure overall sustainability.

Dr. Weerasinghe also believed that once the Staff-Level Agreement is reached with the IMF, it will give a clear picture of debt sustainability and debt targets for Sri Lanka to achieve in the next 10 years.

An IMF mission is scheduled to arrive today to resume discussions on reaching a Staff-Level Agreement by the end of the month.

Sri Lanka is expecting the disbursement of the Extended Fund Facility or the financial bailout by the end of the year to overcome the worst economic crisis it faces post-independence.

On 12 April, Sri Lanka announced a pre-emptive negotiated default of all external debt as of that date. At the end of 2021, Sri Lanka’s external debt amounted to $ 47 billion. (CdeS)

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