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Sri Lanka targets debt restructuring framework in first 6 months of 2024, says president

Sri Lanka expects to implement a debt restructuring framework within the first six months of 2024, the country’s president said on Wednesday, expressing confidence that the nation was recovering from its worst financial crisis in decades.

President Ranil Wickremesinghe, who took over in mid-2022 amid a debilitating financial crisis caused by a severe shortage of foreign exchange, said the island nation was aiming to grow its gross domestic product (GDP) by up to 3% this year.

Sri Lanka’s economy is estimated by the World Bank to have contracted by 3.8% last year but is expected to grow by 1.7% in 2024. Sri Lanka’s central bank has projected a more optimistic growth of 3% for this year.

“Our economy plummeted like a meteorite but we also managed to recover at rocket pace,” Wickremesinghe, 74, told the ceremonial opening of parliament. “We are in the middle of a V-shaped recovery.”

“Now we have to continue on this path. It will not be easy. There are no short-term solutions,” he said, adding that Sri Lanka’s overall debt at the end of September was at $91 billion.

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The South Asian island nation defaulted on its overseas debt in May 2022 after a severe shortage of foreign exchange reserves triggered the worst financial crisis since independence from Britain in 1948.

Sri Lanka has since made progress on about $11 billion of bilateral debt restructuring and hopes to have agreements in place with all key creditors, including bondholders, by May at the latest, Foreign Minister Ali Sabry told Reuters this week.

The country finalized a $2.9 billion bailout from the International Monetary Fund (IMF) in March last year, which helped temper sky-rocketing inflation, improved state revenue and boosted foreign exchange reserves.

Source: CNBC