GSDR to reach agreement with creditors on SL debt restructuring terms
By: Staff Writer
Colombo (LNW): The Global Sovereign Debt Round table(GSDR), has assured that the work continues toward reaching an agreement in principle with official creditors on specific restructuring terms, for Sri Lanka.
The objective of the Global Sovereign Debt Roundtable is to build greater common understanding among key stakeholders involved in debt restructurings.
GSDR works together on the current shortcomings in debt restructuring processes, both within and outside the Common Framework, and ways to address them.
It has reviewed progress in reaching common understanding on ways to address key impediments to efficient debt restructuring, on Thursday (12).
Meanwhile Sri Lanka’s private creditors have sent a proposal on how to restructure $12 billion of overseas debt, including a new type of bond designed to ease repayments in case of future economic pressure,
The overall proposal includes an option for creditors that combines Macro Linked Bonds (MLBs), with a regular bond and a second option of regular bonds with a Value Recovery Instrument (VRI), one of the sources said.
The MLBs were included to ensure the new instruments would be index-eligible, the sources said. Bonds included in an index generally have more liquidity
The IMF said that the GSDR discussed the priority areas for the work going forward.
According to the GSDR Co-chairs Progress Report released at the end of the meeting, significant progress has also been made in actual debt restructuring cases, including Sri Lanka.
However, the time period taken for the programs is still beyond the 2-3 months that were observed in the past.
“There has been a landmark agreement in June between Zambia and their official bilateral creditors, and continued progress in the discussion of other cases.
More broadly, the past 6 months have seen a positive momentum, with somewhat shorter timelines and somewhat smoother processes.
It The report added that for Sri Lanka, the financing assurances provided by an ad hoc committee of official creditors (comprising the Paris Club and India, and co-chaired by France, Japan and India) and China, enabled the approval of the Fund supported program in March 2023.
Since then, the work continues toward reaching an agreement in principle with official creditors on specific restructuring terms, it added.
In parallel, the authorities have concluded the restructuring of some of the domestic debt and are in active negotiations with Eurobond holders on a restructuring plan, said the report.
The GSDR progress report was released by the International Monetary Fund Managing Director Kristalina Georgieva, World Bank President Ajay Banga and Finance Minister of India, Nirmala Sitharaman, co-chairs of the GSDR.