Sri Lanka Considers Restructuring Local and Government Debt: President

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COLOMBO: Sri Lanka is considering restructuring its local and sovereign debt, President Ranil Wickremesinghe said on Friday (Aug. 5), as the island faces the worst financial crisis in its independent history.

The country is expected to resume bailout negotiations with the International Monetary Fund (IMF) in August in hopes of raising $3 billion in funding.

The government is working with its financial and legal advisers Lazard and Clifford Chance to finalize a plan to restructure its foreign debt, including about $12 billion to bondholders.

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“Should we look at the local debt? That has far-reaching consequences,” Wickremesinghe told a conference in Colombo. “The financial advisors look at both things.”

Sri Lanka’s central bank governor said on July 7 that the country will not attempt to restructure local debt.

The IMF has also previously warned countries about problems with local debt restructuring, pointing to the implications for domestic banks.

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“Restructuring domestic debt is like an operation — you only do it when you have to, and you avoid it when it does more harm than good,” IMF officials said in a December blog post.

Sajith Premadasa, leader of Sri Lanka’s main opposition party, met on Friday with Wickremesinghe, who earlier this week reiterated a call for the formation of a unity government to help the country out of the crisis.

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“Had extensive discussions with the president with my team,” Premadasa wrote on Twitter.

“Positive about joining forces in the interest of the country. Will do so without ministerial posts, perks and privileges.”

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