(Image Credit: FT Lanka)
In a movement of historic unity, 12 opposition MPs have called on the Sri Lankan government to negotiate a postponement and restructuring of its $25 billion debt repayments due between now and 2026.
The move comes as the country’s economy is the in the grips of economic crisis with the skyrocketing inflation which has raised the prices of basic commodities and food. The country has also suffered from shortages in essential goods such as fuel and medicines.
The “best way forward for Sri Lanka is to Immediately initiate a multi-step process towards an orderly negotiated postponement and restructure of repayment of its sovereign debt” the joint statement reads.
It further added that:
“This will reduce the pain and hardship that is currently experienced due to the shortage of foreign currency. In any path forward, it is essential that the Government takes measures to consider the difficulties of the poorest and the most vulnerable people in the country and provide them with adequate social security, protection, and relief”.
Central Bank Governor Ajith Nivard Cabraal has maintained that Sri Lanka has been pursuing debt restricting and insisting that the country will honour its debt obligations
The Opposition call is despite Central Bank Governor Ajith Nivard Cabraal reiterating that Sri Lanka has been pursuing an exercise of debt restructuring (reducing International Sovereign Bonds with the use of new bilateral and multilateral loans) and the country can and will honour all its future debt obligations. Cabraal has insisted that the country would only seek “technical assistance” from the IMF and nothing more.
Richard House, head of emerging market debt at Allianz Global Investors, has noted that Sri Lanka has demonstrated “an amazing willingness to pay” but questioned this decision.
“Why they would want to, I’m a bit flabbergasted. They are bankrupt, pretty much… They are wasting precious FX reserves. It’s just delaying the inevitable.”
Read the full joint statement here.