(Colombo), A consortium of bondholders holding Sri Lanka's international bonds has expressed reservations over the transparency of the country's debt restructuring agreement with official creditors.
While acknowledging the recent debt rework agreement totaling $5.9 billion with creditor nations such as Japan, France, and India, the bondholder group, representing a portion of Sri Lanka's $12 billion outstanding bonds, raised concerns about the opacity surrounding the negotiations conducted thus far.
The debt restructuring process has been unfolding with agreements reached between Sri Lanka and various creditor entities. In October, the country concluded a deal with the Export-Import Bank of China, involving approximately $4.2 billion of loans. However, the bondholder group highlighted that the lack of transparency between public and private creditors is hindering their ability to negotiate a deal with Sri Lanka that aligns with International Monetary Fund (IMF) regulations and ensures a "fair and equitable" treatment of debt.
In an emailed statement, the Ad Hoc Group of Bondholders expressed regret over the significant lack of transparency on the part of official sector creditors. The group emphasized its efforts to act as a constructive counterparty, underscoring the challenges posed by the current lack of clarity in the negotiation process.
Issues surrounding the visibility of terms and conditions in agreements between indebted countries and their official and private creditors have recently gained prominence. Notably, objections from official creditors led to the derailing of an agreement in principle between Zambia and its bondholders last week. Zambia's bilateral creditors, including France, China, and India, cited disparities in the proposed deal's terms, emphasizing that they were not comparable to the relief offered by official creditors.
As Sri Lanka navigates its debt restructuring, stakeholders are closely monitoring developments to ensure transparency and adherence to international financial regulations.
