Visiting IMF delegation holds talks with President Ranil Wickremasinghe
The visiting delegation of the International Monetary Fund (IMF) called on Sri Lanka President Ranil Wickremesinghe yesterday evening (Aug 24) and discussed the current situation of the economic crisis the nation is grappling with at present.
The meeting with the Head of State came after the delegates of the global lender kicked off discussions with Governor of Central Bank of Sri Lanka, Dr. Nandalal Weerasinghe this morning, to finalize a staff-level agreement for a possible US$ 3 billion bailout package, including restructuring debt of about $29 billion.
IMF’s Resident Representative for Sri Lanka, Tubagus Feridhanusetyawan and Finance Secretary Mahinda Siriwardana also participated in the talks at the Central Bank premises.
The IM delegation will be in Colombo from August 24 to 31. Another round of discussion is scheduled to take place on August 26.
During the meeting with President Wickremesinghe, the IMF delegates decided to hold further discussions with the Central Bank officials on technical issues, the President’s Media Division (PMD) said.
Chief of the Debt Capital Markets Division of IMF’s Monetary and Capital Market Department Mr. Peter Breuer, Secretary to President Saman Ekanayake, President’s Chief of Staff Sagala Ratnayake and Central Bank Governor Dr. Nanadalal Weerasinghealso joined the discussion.
The team will also hold talks with the central bank governor and other officials, including representatives of Sri Lanka’s financial and legal advisers Lazard’s and Clifford Chance.
The main sticking point of the talks is how to find a sustainable track for Sri Lanka’s unwieldy debt, which stood at 114% of GDP at the end of last year, so as to clinch a staff-level agreement in September.
Sri Lanka has $9.6 billion in bilateral debt and its private credit, which includes international sovereign bonds, stands at $19.8 billion, finance ministry data show.
Japan and China are the largest holders of bilateral debt, with the latter accounting for about $3.5 billion. Overall, when commercial debt is added, China holds about a fifth of Sri Lanka’s debt portfolio.
“The issue will be how Chinese and domestic debt will be included in the talks,” said Timothy Ash, senior emerging markets sovereign strategist at BlueBay Asset Management.
“Other bilateral creditors won’t be willing to allow China to get away with not having comparable President Ranil Wickremesinghe, who is also the finance minister, plans to ask Japan to lead talks on bilateral debt restructuring after Sri Lanka secures IMF support.
The government is “negotiating on many fronts, and it has to make progress at least with the big creditors” for debt talks to move forward, said Sergi Lanau, deputy chief economist at the Institute of International Finance
treatment this time. China is part of the problem, and needs to be part of the solution this time.”