Need to restructure debts to be able to pay it back: Sri Lankan Bank Gov

Sri Lanka won't be able to pay back its debts until it restructures them, Central Bank governor P Nandalal Weerasinghe said as he called for the early appointment fo restructuring process.

Sri Lanka won't be able to pay back its debts until it restructures them, Central Bank governor P Nandalal Weerasinghe said on Thursday as he called for the early appointment of financial advisers and lawyers for the debt restructuring process.

Speaking to the media here, Weerasinghe said that there is an urgent need for the new leaders of the country to bring the economic situation to stability.

The Opposition said in Parliament on Wednesday that the country for the first time in its history was defaulting on an international sovereign bond payment at the end of a 30-day grace period which fell yesterday. They claimed it was a hard default.

Sri Lankan Prime Minister Ranil Wickremesinghe also on Wednesday said the country has missed a payment to the Asian Development Bank, blocking fresh funds amid warnings that the currency crisis-hit country could be locked out of multilateral funding in a new blow.

Sri Lanka has already suspended repayments for international sovereign bonds, commercial bank loans, Exim bank loans, and bilateral loans. However, multilateral lenders and senior creditors were excluded.

Sri Lanka is now negotiating a loan with the IMF. The country had to pay USD 106.34 million this year but only managed to pay USD 12.4 million by April.

The Prime Minister then said the debt-ridden country could not even pay a million dollars.

Weerasinghe said that the nation has announced a pre-emptive default.

What we have announced is a pre-emptive default, we have announced that we are not going to pay, he said.

Weerasinghe said you can technically term it a hard default based on the agreements.

He said on April 12 that Sri Lanka had announced its suspension of debt payments as it couldn't pay.

We had already announced that we will not be able to pay until we restructure the debt.

Weerasinghe said that the appointment of financial advisers and lawyers for debt restructuring could be done soon.

He threatened to resign two weeks ago unless action was taken to bring in political stability.

Now there is a prime minister and a cabinet, decision making is now possible compared to when I said that,Weerasinghe said.

He said he had met the new prime minister Wickremesinghe and hoped that work on economic stability could now make progress.

Wickremesinghe told Parliament he would be presenting a report on the debt default soon as most of the information required were missing.

Having announced the debt default Sri Lanka initiated talks with the IMF for a possible bail out.

The IMF has however termed Sri Lanka's current debt as unsustainable and invited the government attention to tackle the issue.