Sri Lanka Looks For Debt Moratorium Till 2027: President

COLOMBO (News 1st); Sri Lankan President Ranil Wickremesinghe announced the government's goal is to obtain temporary relief from debt defaults from 2023 to 2027.

In a statement to Parliament, Ranil Wickremesinghe announced the government's active involvement in negotiations aimed at restructuring all loans, both domestic and foreign. 

Expressing optimism, President Wickremesinghe conveyed confidence that these discussions would yield favorable outcomes in the near future. 

The primary objective of these negotiations, as outlined by the President, is to secure temporary relief from debt defaults spanning from 2023 to 2027. Subsequently, the government plans to embark on a diligent path towards loan repayment, spanning the period from 2027 to 2042.

Highlighting the substantial debt burden faced by Sri Lanka, President Wickremesinghe referenced projections indicating the country's obligation to repay approximately US$6 billion in foreign debt annually by 2022. 

This obligation, he noted, accounted for approximately 9.5% of the nation's GDP, placing significant strain on its financial resources.

However, through successful negotiations for debt restructuring, the President outlined aspirations to mitigate this burden substantially. Specifically, the government aims to reduce annual foreign debt payments to 4.5% of the GDP, marking a significant halving of the previous percentage.

President Wickremesinghe also provided insights into Sri Lanka's economic trajectory, citing observed growth trends in 2022 and 2023. 

With a continuation of these positive trends, he expressed confidence in maintaining a high percentage of state income. In such a scenario, servicing the country's debt would no longer be deemed burdensome. Notably, the President underscored the government's efforts in elevating state revenue to nearly 11% of the GDP, a feat necessitating the imposition of Value Added Tax (VAT).

Acknowledging the contentious nature of implementing such taxation measures, President Wickremesinghe emphasized the government's reluctant decision to proceed with VAT implementation. 

However, in light of the economic challenges faced by the nation, he asserted the absence of viable alternatives, stressing the necessity to endure temporary hardships for long-term benefits. 

The implementation of VAT, President Wickremesinghe noted, has bolstered government revenue, showcasing Sri Lanka's commitment and capacity to fulfill its debt obligations to the international community. 

Moreover, with the revival of the economy and the increase in government revenues, the President highlighted the strengthening of the rupee as a positive indicator of progress.