The Secretary to the Ministry of Finance states that Sri Lanka will suspend normal debt servicing of all affected debts for an interim period pending an orderly and consensual restructuring of those obligations in a manner consistent with an economic adjustment program supported by the International Monetary Fund (IMF).
According to the Central Bank Governor Nandalal Weerasinghe, this decision was taken to avoid a hard default and with its limited foreign reserves required for imports of essential items such as fuel.
“It has come to a point that making debt payments are challenging and impossible. The best action that can be taken is to restructure debt and avoid a hard default,” Governor Nandalal Weerasinghe told reporters.
This policy of the government will be applied to amounts of affected debts outstanding on 02 April, 2022, a statement issued by the ministry read.
“New credit facilities, and any amounts disbursed under existing credit facilities, after that date are not subject to this policy and shall be serviced normally.”
Moreover, the Finance Ministry states that the Sri Lanka Government is taking emergency measures to prevent further deterioration of the Republic’s financial position and to ensure fair and equitable treatment of all creditors in comprehensive debt restructuring.