Responding to reports that Sri Lanka’s bondholders have rejected a restructuring proposal, Heidi Chow, Executive Director of Debt Justice said:
“Once again banks, asset managers and hedge funds are refusing to agree to urgent debt relief, seeking massive profits instead. It’s been four years since the G20 first asked private lenders nicely to take part in global debt relief. Financiers have ignored them and been laughing all the way to the bank since. The only way that private lenders will take part in sufficient and timely debt relief is if they are forced to, through new laws in the UK and New York.”
Charith Gunawardena, Co-Founder of the Institute for Political Economy, Sri Lanka, said:
“Private creditors who have enjoyed high interest rates should not be further rewarded for their reckless lending practices. The Sri Lanka government should place the well being of its people at the heart of all negotiations and work towards a genuinely sustainable solution. They should push for debt cancellation.”
Bondholders’ refusal of Sri Lanka’s restructuring proposal follows a similar refusal yesterday by Ghana’s bondholders of debt relief.
Private lenders have consistently refused to participate in international debt relief initiatives proposed by the G20 since the Covid pandemic, including the 2020 debt suspension scheme. No meaningful debt relief has been granted through the G20 Common Framework in the four years of its operation. After over three years of negotiations, Zambia finally reached an in principle agreement with bondholders in March 2024, but still has to reach agreements with other private creditors. Glencore refused to give meaningful debt relief to Chad.
Sri Lanka is not eligible for the Common Framework but has been negotiating with lenders since defaulting in April 2022.