Sri Lanka

Sri Lanka’s Parliament has said that it has appointed a committee to probe into the country’s financial bankruptcy and submit recommendations on the matter, The Siasat Daily reported. Speaker Mahinda Yapa Abeywardena announced in Parliament on Thursday that the committee would be chaired by lawmaker of Sri Lanka Podujana Peramuna (SLPP) Sagara Kariyawasam, Xinhua news agency reported. Abeywardena said there are many allegations about the cause of Sri Lanka’s bankruptcy in 2022, and the committee is entrusted with investigating these allegations.

Sri Lanka’s President Ranil Wickremesinghe has expressed hope that the country will be able to shed its bankruptcy status by September and boost its economy, the Economic Times of India reported. Wickremesinghe’s remark came in the backdrop of Lanka's parliament approving a domestic debt restructuring plan on Saturday that is crucial to continue a $2.9 billion bailout from the International Monetary Fund (IMF). The plan was passed with a majority of 122 votes in the 225-member parliament.

Sri Lanka’s Cabinet on Wednesday approved a program to restructure the country's staggering domestic debt as the island nation struggles to emerge from an economic crisis that has engulfed it since last year, the Associated Press reported. The domestic debt restructuring is required as part of a bailout package obtained from the International Monterey Fund, under which nearly $3 billion in government budgetary support will be disbursed in stages. Sri Lanka’s total debt exceeds $83 billion, of which $41.5 billion is foreign and $42.1 billion is domestic.

The Sri Lankan Cabinet has approved a joint proposal presented by the President and the Minister of Justice, Prison Affairs, and Constitutional Reform to authorize the Law Commission to prepare a preliminary draft of the insolvency laws within a period of three (03) months after consultation with the relevant parties, LankaBusinessOnline.com reported. Reforms in the insolvency laws for unincorporated small businesses and consumer insolvency are contained in the Insolvency Ordinance 1853, and provisions relating to company insolvency are contained in the Companies Act No.

China will continue to provide assistance "within its capabilities" for Sri Lanka's economic and social development, China Foreign Minister Qin Gang said on Sunday, Reuters reported. Qin Gang, in a meeting with Sri Lanka counterpart Ali Sabry in Beijing, said China is willing to consolidate and expand the strategic cooperative partnership between the two countries, according to a statement on the foreign ministry's website. Read more.

The Central Bank of Sri Lanka reduced its interest rates Thursday for the first time since the island nation declared bankruptcy, after stern fiscal controls, improved foreign currency income and help from an International Monetary Fund program resulted in inflation slowing faster than expected, the Associated Press reported. The Central Bank said in a statement that the lending and deposit interest rates were reduced by 250 basis points to 14% and 13%.

Sri Lankan authorities formally presented on Tuesday a request for debt treatment in the first meeting of the official bilateral creditors committee, the Paris Club said in a statement, Reuters reported. The committee, co-chaired by India, Japan and France, consists of 17 members and includes Paris Club creditors as well as other official bilateral creditors.

Sri Lanka's economy is expected to shrink by 2% in 2023, its central bank said in an annual report on Thursday, as the country struggled to emerge from its worst financial crisis in decades, Reuters reported. The central bank projected Sri Lanka's economy would grow by 3.3% in 2024, according to the report. The economy shrank by 7.8% in 2022, in a year dominated by deep political instability, soaring inflation and steep currency depreciation as Sri Lanka struggled with a financial crisis triggered by record low foreign exchange reserves.

A committee of Sri Lanka's international private creditors sent its first debt rework proposal to the country's authorities regarding over $12 billion in bonds outstanding, Reuters reported. It is the first bondholder proposal after the island-nation of 22 million people defaulted on its debt a year ago. It is a first formal step to engage with the country's authorities. Details of the proposal were not immediately available. Representatives for the government did not respond to a request for comment. A spokesperson representing the creditor committee declined to comment.

Holders of Sri Lanka's international sovereign bonds face a 20% principal haircut in the country's debt restructuring as well as maturity extensions and a reduction in coupons, according to a Barclays report, Reuters reported. Investors' focus has shifted to the restructuring of Sri Lanka's $13.4 billion sovereign dollar bonds after Colombo got final sign off on a $3 billion programme from the International Monetary Fund (IMF) earlier this week, a financial lifeline in its bid to recover from its worst economic crisis in more than seven decades.