By US Government Backs Sri Lanka’s Extension Request for Debt Restructuring Proceedings
The United States Government has thrown its support behind Sri Lanka’s plea for an additional five-month extension of debt restructuring proceedings. Praising Sri Lanka’s dedication to its debt restructuring program and the progress achieved, the US sees this extension as a reasonable step in line with its policy.
In a letter addressed to US District Judge Denise L. Cote, the Department of Justice emphasized Sri Lanka’s strategic significance as a key partner in the Indo-Pacific region. The US government fully endorses Sri Lanka’s efforts towards economic recovery and its advancements within the IMF program. This backing extends to Sri Lanka’s economic and governmental reform initiatives aimed at fostering sustainable growth.
Risk Of Failure
Underlining the risks of failed debt restructuring, the Department of Justice highlighted the potential threats to Sri Lanka’s progress and economic well-being. A stay in proceedings, it argued, would benefit both bilateral and private commercial creditors engaged in negotiations, safeguarding public interests.
The US has long advocated for orderly and cooperative resolutions of sovereign debt defaults, considering them vital for global stability and economic growth. Recognizing the potential benefits of a stay, the US anticipates a consensus among creditors on debt treatment terms, facilitating negotiations with private creditors.
Positive Developments
Recent progress, including an ‘agreement in principle’ reached between Sri Lanka and the Official Creditors Committee (OCC), signals positive developments. However, the Department of Justice warns that a breakdown in negotiations could undermine Sri Lanka’s efforts and lead to further complications.
In the intricate process of debt restructuring involving multiple stakeholders, Sri Lanka’s commitment to seeking comparable treatment from all creditors remains crucial. Finalizing agreements with entities like the OCC will pave the way for negotiations with private creditors, ensuring consistency in treatment.
Amidst legal challenges, including a lawsuit filed by a bondholder, Sri Lanka’s economic crisis persists. The government’s motion to dismiss the lawsuit underscores its stance on contractual standing amidst a turbulent economic landscape.
In essence, the US Government’s endorsement underscores the importance of continued cooperation and support for Sri Lanka’s path towards economic stability and growth
