INSUBCONTINENT EXCLUSIVE:
The successful formation of a government under the new president, Ranil Wickremesinghe, is an important precondition for resolving Sri
negotiate and carry out difficult reforms as part of efforts to restore macroeconomic stability and debt sustainability.Fitch Ratings also
President Wickremesinghe was prime minister in the previous administration under President Gotabaya Rajapaksa, who was brought down by
government to include elements such as higher taxes, expenditure rationalisation and a commitment to a greater degree of exchange-rate
There is a significant risk that such reforms could cause public opposition that might impede their implementation
In the absence of an IMF deal, we expect Sri Lanka to face a very strained external position in the near term
The country has little foreign exchange to pay even for essential imports such as fuel, food and medicines, with official reserve assets at
sustainability would be restored.Debt negotiations could be complicated by debt owed to China, Fitch Ratings added
China has traditionally preferred to offer relief for large loans through deferrals such as maturity extensions, payment rescheduling or
grace periods, rather than through write-downs
However, this approach could increase challenges for Sri Lanka to successfully negotiate debt restructuring with other creditors, including
banking sector that would erode the net benefits of such a restructuring, and when we affirmed the Long-Term Local-Currency IDR in May we
local-currency debt will be included in debt restructuring, as the stock and interest costs are large, and omitting it could increase the
the international financial community.
This article first appeared/also appeared in https://adaderana.lk
