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Sri Lanka considering restructuring sovereign and local debt: President

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Sri Lanka considering restructuring of local and sovereign debt: President

Sri Lanka is considering restructuring local and sovereign debt, President Ranil Wickremesinghe said on Friday, as the island nation grapples with its worst financial crisis in its independent history.

The country is to resume bailout talks with the International Monetary Fund (IMF) in August in hopes of securing $3 billion in funding.

The government is working with its financial and legal advisers Lazard and Clifford Chance to finalize a plan to restructure foreign debt, which owes about $12 billion to bondholders.

“Should we focus on local debt? It will have far-reaching consequences,” Wickremesinghe told a conference in Colombo. “Financial advisors are looking at both things.”

The governor of Sri Lanka’s central bank said on 7 July that the country would not seek restructuring of the local debt.

The IMF has previously warned countries about the issues of restructuring local debt, pointing to the impact on domestic banks.

“Domestic debt restructuring is like surgery – you only do it when you must, and you avoid it, if it can do more harm than good,” IMF officials said in a blog post in December.

easy to resist

Hit hard by the pandemic, which decimated the vital tourism industry, and tax cuts by the government of then-President Gotabaya Rajapaksa, Sri Lanka is facing its worst economic crisis since independence from Britain in 1948.

Fuel queues and rising inflation have become commonplace for ordinary Sri Lankans.

In July, months of unrest over Rajapaksa raged after protesters occupied key government buildings in Colombo.

Some protesters began clearing a protest site in the commercial capital Colombo on Friday, despite police refusing to enforce orders to remove them.

A lawyer involved in the hearing told Reuters that government lawyers told the Supreme Court on Friday it would not try to remove the protesters, known as Gota Go Gama, or village, from the site to pay tribute to Rajapaksa until August 10. Will do

Police had earlier given protesters until 5 pm (1130 GMT) on Friday to vacate the site.

However, some protesters were seen pitching tents at the site in front of the country’s presidential secretariat, ahead of the Supreme Court’s decision.

“We are not breaking up because of police orders,” 26-year-old protester Gayan Madushanka told Reuters.

“At the moment we are leaving this place to continue the nationwide struggle. The struggle will not end.”

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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