- China’s bilateral debt to reduce to less than 50%
- Govt. has made representations to IMF on the move
- Discussions also ongoing on Chinese debt restructuring
- G20 ministers to discuss SL on 23-24 February in Delhi
The Government has made representations to the International Monetary Fund (IMF) that it is working on reclassifying some of Sri Lanka’s bilateral debt in order to finalise the country’s debt restructuring programme in line with the fund’s requirements, The Sunday Morning learns.
A highly-placed Government source told The Sunday Morning that the Government was currently working with the IMF to look at reclassification of bilateral debt, especially Chinese debt.
Accordingly, Chinese debt is to be reclassified as bilateral and commercial debt, it is learnt. This in turn will reduce China’s bilateral debt to Sri Lanka to less than 50%.
The source explained that following a reclassification of debt, China will not hold the position of Sri Lanka’s key bilateral debtor.
The IMF will then be requested to proceed with Sri Lanka’s debt restructuring plan since a majority of the bilateral creditors are onboard with the IMF requirements to accept the debt restructuring programme to process the Extended Fund Facility (EFF).
It was The Sunday Morning newspaper’s ‘The Black Box’ column that exclusively reported last week that the Government was exploring an alternative mechanism to secure the IMF deal.
The Sri Lankan Government, it is reliably learnt, has fulfilled the conditions laid down by the IMF. The final condition was the implementation of a cost-reflective tariff system for electricity.
However, the source further noted that the Sri Lankan Government was also continuing with the discussion with China to get the Chinese side to agree to the IMF’s requirements in relation to Sri Lanka’s debt restructuring programme.
High-level discussions between the Governments of Sri Lanka and China are ongoing in this regard.
It is further learnt that Sri Lanka’s debt restructuring programme and a push for China to further accommodate Sri Lanka’s requests on the matter will take place when G20 Finance and Foreign Ministers meet on Thursday (23) and Friday (24) in New Delhi, India.
Bloomberg News on Friday (17) reported that the IMF was looking at proceeding with approving the financial bailout package for Sri Lanka even without an official announcement by the Chinese on Sri Lanka’s debt restructuring programme.
Sri Lanka’s other bilateral creditors – India, Japan, and the Paris Club – had informed the Government and issued notifications supporting the IMF’s debt restructuring measures.