Ranil Wickremesinghe, the President of Sri Lanka, has hit back at Opposition claims that the nation’s debt restructuring deal with its main bilateral creditors is inadequate and promised to lay all agreements and documents about this matter before a parliamentary committee for examination. However, a planned two-day debate on the deal in parliament was postponed when opposition members demonstrated against lack of transparency in relation to the agreements.
Dismissing criticism by the opposition as inaccurate Wickremesinghe argued “No principal amount will be reduced by any bilateral creditor.” Rather, he said; “There are concessions whereby longer repayment periods and lower interest rates are allowed.”
The head of state who also doubles as finance minister said these include extending principal repayments for bilateral creditors until 2028, keeping interest rates below 2.1% and extending full term grace period for settling debts up to 2043.
Wickremesinghe further stated that external debt of Sri Lanka now amounts to $37 billion which includes $10.6 billion through bilateral credits and $11.7 billion from multilateral sources. The sovereign bonds account for USD 12.5bn out of a total commercial debt stock of USD 14.7bn. The objective behind its restructuring is to ensure the sustainability of this debt thus freeing funds for public services.
According to President Wickremesinghe his office posted on X he would submit all agreements and documents regarding debt restructuring to Parliament’s Public Finance Committee highlighting how important it was that such matters should receive wider attention through scrutiny.
He added that debt was restructured so as to make it sustainable and allow more money go towards social programs.
“With foreign borrowing not possible, we stopped projects mid-way,” He said
When Sri Lanka defaulted on bond payment in April 2022 foreign lending ceased.
Wickremesinghe noted that during those troubled times India and Bangladesh extended credit facilities. “During those times we were supported by two friends countries -India and Bangladesh- which provided us with short-term credit assistance. “No other nation was allowed to make long-term loans,” he explained.
According to Wickremesinghe, once the discussions with the sovereign bond holders are over, all debt restructuring agreements will be presented in Parliament.
The leader of the main opposition Sajith Premadasa followed this statement, reiterating that the government did not get the best deal in restructuring its debts.
