ECONOMYNEXT – Sri Lanka’s Cabinet Spokesman and Transport Minister Bandula Gunawardana warned against delays in foreign debt restructuring and said the country could be pushed back to face difficulties in paying for fuel, cooking gas, and medicines.
President Ranil Wickremesinghe’s government has already announced a domestic debt optimization (DDO) programme after holders of international sovereign bonds reiterated equal treatment of foreign and domestic creditors as a prerequisite for their participation in the external debt restructuring.
However, trade unions in state-owned enterprises and private sector have started protesting against the proposed DDO despite the island nation’s Supreme Court declining to hear a case against the restructuring of debt in the largest pension fund.
“We have come to the final phase of the debt restructuring. However, some processes are being delayed,” Gunawardana told reporters in Colombo at a media briefing.
“Without knowing the consequences of timely debt restructuring, some have gone to courts. The government believes that the foreign debt restructuring could be finalized by October,” he said.
“If we cannot do that, we will go back to the situation we faced a year ago – fuel shipments will come, but we will not have money to pay for oil shipments, cooking gas shipments will come, but no money to pay for them. We won’t be able to import medicines. The prices of goods will spike like a kite with no string. The country will be destroyed.”
The lack of consensus over DDO has raised concerns over the timing of overall debt restructuring, which is a must for the country to seek commercial loans from global capital markets, analysts say.
“So, if we do not find solutions for the massive debt crisis, no government will survive more than one month regardless of a change in the president or government or ministers,” he warned.
“Nobody is lending to us now because we have not repaid the loans we borrowed in the past.” (Colombo/September 4/2023)