Sir Lanka's world-beating bonds pin hopes on IMF billions: Report

Investors are betting that Sri Lanka will win final approval for about $2.9 billion bailout from the International Monetary Fund, a key step for the bankrupt nation to revive its economy from the worst crisis in decades.
 
The nation’s dollar bonds have returned 20 per cent this year, the top performers. The local currency surged 8 per cent and stocks climbed 5 per cent this month, beating their Asian peers on anticipation of billions of dollars in financing trickling in. The rupee fell 45 per cent last year, while the CSE All-share index declined more than 30 per cent in 2022.
 
The funds are crucial to restore stability and debt sustainability for an economy mired in a recession. Through 2022, shortages of essential goods from fuel to medicines loomed large, stoking Asia’s fastest inflation and depleting funds.
 
Since defaulting on its dollar debt in May, Sri Lanka has taken tough measures to put its economy back on a steadier path, including cutting subsidies, raising taxes and loosening its control on the currency. It also increased borrowing cost to the most since 2001.

 

Sri Lanka also secured debt assurances from bilateral creditors including India, China and Paris Club nations and initiated good-faith negotiations with private bondholders as pre-requisites to getting the bailout.
 
“The pathway appears to have been gradually cleared for the IMF board to sign off on the program,” said Esther Law, senior investment manager for emerging-markets debt at Amundi SA in London. “One would expect the bonds move up slightly in price the moment the IMF program is announced.”
 
Debt due in 2030 has risen to about 36 cents on the dollar from 21 cents in November.

Lanka seeks ‘10-yr’ time to repay debt

Sri Lanka is seeking a 10-year moratorium on its foreign debt, President Ranil Wickremesinghe's office said Monday.

Wickremesinghe’s office quoted him as saying the widely expected International Monetary Fund rescue “will only give us a breathing space where they will say we are no longer bankrupt”.

“All the money we have to repay this year, I hope we will be given at least 10 more years to repay it,” Wickremesinghe said.

He did not give details of his plans to restructure Sri Lanka's $46 billion external debt.

                                                                                                                                                               -  PTI