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Sri Lanka to start restructuring talks with investors next week, Bloomberg News reports

Sri Lanka’s Foreign Minister Ali Sabry attends a meeting of foreign ministers from the EU, Indo-Pacific and ASEAN countries, in Brussels, Belgium February 2, 2024.

Sri Lanka to start restructuring talks with investors next week, Bloomberg News reports

Global investors and Sri Lankan officials expect to start negotiations aimed at restructuring $12 billion in defaulted global bonds next week, Bloomberg News reported on Thursday.

A steering committee, comprising of bondholders, will begin talks as they weigh a proposal from the government to rework the overseas debt that has been in default since 2022, the report said citing people familiar with the matter.

The aim is to expedite a deal, particularly since Sri Lanka is due to hold presidential elections later this year, the report added.

The government did not immediately respond to a Reuters request for a comment.

Sri Lanka said it had shared a fresh debt restructuring proposal with private creditors in mid-February.

Foreign Minister Ali Sabry last month told Reuters that the island nation anticipates attracting approximately $5 billion in foreign funds over the next two years once the restructuring of its overseas debt is finalized.

The nation defaulted on the debt in May 2022, following a severe shortage of foreign exchange reserves, which triggered the country's worst financial crisis since gaining independence from Britain in 1948.

In March last year, Sri Lanka secured a $2.9 billion bailout from the International Monetary Fund (IMF), helping to temper inflation, increase state revenue and rebuild foreign exchange reserves.

Sri Lanka's economy shrank 2.3% last year, which was better than the 3.6% contraction expected by the IMF.

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