Sri Lanka

Sri Lanka: President hints at inclusion of local debt in restructuring

  • President Wickremesinghe shocked the local debt market by saying domestic debt may have to be included in restructuring

  • Domestic debt has already received upfront "haircut" via >60% inflation and inclusion could cause financial instability

  • IMF DSA will define restructuring perimeter, but in meantime comments will worsen financing challenges and monetisation

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