Sri Lanka Official Creditors Set to Make Restructuring Proposal

Sri Lanka’s official creditors will submit a debt restructuring proposal “very soon,” according to a person with knowledge of the matter.

(Bloomberg) — Sri Lanka’s official creditors will submit a debt restructuring proposal “very soon,” according to a person with knowledge of the matter.

The creditor committee, co-led by India, Japan and France, has made significant progress in its technical work and a proposal will be made very soon to Sri Lanka, the person said, declining to be identified as the matter is confidential.

The committee has opened its meetings and shared analysis documents with China, as coordination between official creditors is necessary to ensure that the overall restructuring outcome allows Sri Lanka to meet the debt sustainability parameters of a $3 billion International Monetary Fund bailout, the person added.

Sri Lanka on Thursday secured a staff-level agreement on economic policies that must be approved by the IMF’s executive board before the island nation can receive its next payout of about $330 million. The multilateral lender’s sign-off is also contingent on the implementation of undisclosed prior actions and adequate progress being made to conclude debt restructuring.

Sri Lanka has carried out an exchange of local debt and struck a tentative deal with the Export-Import Bank of China. A group of dollar bondholders also submitted a restructuring proposal, though it received an unfavorable initial response from authorities.