Sri Lanka postpones debt restructuring talks, hopes for IMF deal in December

Sri Lanka has postponed a round of debt restructuring talks initially expected to be held on Thursday to allow central bank and treasury officials to provide clarifications sought by the country’s creditors, its state minister of finance said.

The island nation formally kicked off the talks in September after securing a preliminary $2.9 billion bailout with the International Monetary Fund, a step on a path out of the country’s worst financial crisis in a decade.

But it needs to secure financing assurances from key creditors including China, Japan and India before the funds can be disbursed.

“There are different concerns that different creditors want cleared so it was decided that these clarifications would be communicated first and then new dates would be set for another round of talks,” state minister Shehan Semasinghe Semasinghe told Reuters on Thursday.

“The dates are yet to be decided.”

Semasinghe did not provide details on the creditors’ concerns or what exactly was being discussed between them and Sri Lanka’s central bank and treasury officials.

Sri Lanka had earlier set a target of getting board level IMF approval in December for the planned four-year programme.

“We are focusing on financing assurances. As of now no bilateral creditor has informed us that they are not going to support us,” Semasinghe added.

“We have a target and we are pushing hard to meet it in December.”

Sri Lankan officials have also had talks with representatives from China EXIM Bank and China Development Bank which together hold about $4.3 billion in loans given to fund large infrastructure projects over the last 20 years. China is Sri Lanka’s largest bilateral lender.

Sri Lanka has been gripped by a deep financial crisis this year caused by record-low foreign exchange reserves that has left the island of 22 million people struggling to pay for essential imports including fuel, food, cooking gas and medicine.

(Reuters)