Sri Lanka’s Central Bank Governor Rules out Restructuring of locally Issued Debt

While external debt restructuring remains a top priority for the Sri Lankan government, domestic debt in
the form of Government securities and Sri Lanka Development Bonds will not be restructured, Central
Bank Governor Dr. Nandalal Weerasinghe announced today (April 28, 2022).

Dr. Weerasinghe made these comments while addressing a meeting of the Committee of the Ceylon
Chamber of Commerce at which he was the Guest Speaker, during which he also provided an update on
the progress made during the recent discussions with the International Monetary Fund and World Bank
last week.

Noting that encouraging progress had been made towards establishing a macro-fiscal policy framework
and initiating structural reforms, he expressed confidence that a staff-level agreement with the IMF is
likely to be reached within the next two months.

Dr. Weerasinghe also announced that additional measures will be implemented in order to address
urgent economic concerns. The measures include introducing regulations to encourage USD flows
currently transacting in the informal market to be channeled through the formal banking system. As a
result of policy measures already introduced by the Central Bank of Sri Lanka (CBSL) and the
government, he is of the view that expenditure on imports will be declining further to more sustainable
levels.

The Governor also highlighted the need to strengthen the social safety net with the rising cost of living.
To this effect, multilateral agencies such as the World Bank will be looking to reallocate funds
committed for projects towards assisting vulnerable segments of the population, he stated.
While expediting IMF negotiations and implementing sustainable economic policy reforms being the
main priority, he added that IMF action will continue irrespective of the political landscape, and also
stressed that all creditors will be treated equally in the debt-restructuring process. The Governor sought
the assistance of the private sector in successfully implementing measures to stabilize the economy.