- Ravi Abeysuriya says market access going to take time
- Cites political instability a reason for delay in recovery
Sri Lanka is expected to take at least another 4 years to gain international market access as the country needs to achieve macroeconomic stability for rating agencies to start raising its credit ratings, a financial analyst said.
Senior Financial Analyst and former CEO of Fitch Ratings Sri Lanka, Ravi Abeysuriya said in an interview with DeranaTV on Saturday (1), that although some bankrupt countries in the past have gained market access through reforms in a short time period of 6 months, in the case of Sri Lanka, it cannot obtain market access that soon.
“In Sri Lanka, we cannot expect that (market access) very soon because our (Sri Lanka’s) political stability is in question as many say the current government is not appointed through a mandate,” he added.
Sri Lanka has lost international market access since 2020, and since the suspension of external debt servicing in April 2022, rating agencies such as Fitch Ratings, Moody’s and Standard & Poor’s have put Sri Lanka’s external debt ratings to default.
Moreover, the staff report by the International Monetary Fund (IMF) of Sri Lanka’s Extended Fund Facility (EFF) shows that Sri Lanka is expected to gain international market access by 2027 and raise $ 1.5 billion in International Sovereign Bonds (ISBs) in the same year.
IMF states that Sri Lanka’s external financing would be only limited to financing from official sources until 2026, in line with programme assumptions.
Further, on Thursday (30 March), it was revealed that Sri Lanka is considering a restructuring of $ 7.1 billion of Treasury Bills held by the Central Bank of Sri Lanka (CBSL) as part of domestic debt restructuring while a voluntary Domestic Debt Optimisation (DDO) operation without coercion is envisaged on major Treasury Bondholders.
“The DDO will help reduce the efforts required from external creditors to restore debt sustainability but taking into account financial stability objectives,” Sri Lankan Authorities told creditors.
Sri Lankan authorities envisage finalising the DDO operation by May 2023, and the external debt restructuring exercise by September 2023.