Info about USD 4.2 bn debt deal with China shared with other creditors – CBSL Chief

Sri Lankan government had shared the details and the conditions of the 4.2 billion dollar debt deal with China with other creditors, Governor of the Central Bank Dr. Nandalal Weerasinghe told Bloomberg.Governor Weerasinghe expressed optimism about restructuring Sri Lanka’s debt through the official creditors committee, aiming to secure IMF support for a 330 million dollar payout by year-end.

The recent surprise debt deal with China had raised concerns about transparency, but Weerasinghe has now shared its details with the IMF and creditors, Bloomberg said.Sri Lanka seeks to stabilise its economy after last year’s severe crisis and default on debt, Bloomberg has reported.

Dr. Weerasinghe highlighted the progress, i.e., inflation had dropped to 1.5%, forex reserves had surged to $3.6 billion, and shortages of essentials had eased. He reaffirmed the Central Bank’s hands-off approach to the exchange rate, intervening only to curb volatility and bolster reserves.

The country’s currency rallied 12% this year, a stark reversal from its 45% decline in 2022, and IMF funds bolstered hopes for fiscal recovery, driving nearly 70% returns on Sri Lanka’s dollar bonds, Bloomberg reported.

Weerasinghe emphasized adherence to IMF targets, seeking to increase reserves to around three months of import cover while aiming for a more flexible exchange rate. Clearing uncertainties in debt restructuring is expected to expedite monetary policy transmission, narrowing the gap between policy and market rates.