Financial advisory group Lazard has started talks with India, China and Japan on restructuring Sri Lanka’s debt, a Sri Lankan government spokesman said on Tuesday, as the island nation in crisis search a Bailout from the International Monetary Fund (IMF).
Lazard was hired by Sri Lanka in May, along with international lawyers Clifford Chance, to guide the government through the process of restructuring its debt, for which estimates range from $85 billion to well over $100 billion. dollars.
Earlier this month, the IMF announced that it had reached a preliminary agreement with Sri Lanka for a loan of around $2.9 billion. But for the deal to go through, the country will need debt relief from China, India and Japan, its three main international lenders.
“They are talking to India, China and Japan, mainly to make sure we get some sort of consensus,” acting cabinet spokesman Ramesh Pathirana told reporters. , referring to Lazard.
“We will cross our fingers to reach an agreement.”
The three countries hold about $13 billion of Sri Lanka’s debt, while China is Sri Lanka’s largest bilateral creditor.
Sri Lanka is also expected to formally contact private creditors who hold about $12 billion in bonds later this week, a government source told Reuters.
“The government plans to start talks with the ambassadors of China, the United States, Japan and India next week on debt restructuring,” the source said, declining to be named because he was not authorized to speak to the media.
Sri Lanka is in the grip of its worst financial crisis in seven decades, leaving it with meager foreign exchange reserves to pay for essential imports of fuel, food and medicine.
(Reporting by Uditha Jayasinghe in Colombo; Writing by Tanvi Mehta in New Delhi; Editing by Tom Hogue and Edmund Klamann)
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