Business

Sri Lanka’s Sovereign Foreign Debt: to restructure or not?

Published

4 years ago

2022/01/14

By Dr Dushni Weerakoon

Sovereign debt restructuring can be pre-emptive or post-default. A default is inherently costly as it can result in a sustained loss of access to capital markets. That leaves pre-emptive restructuring when a country deems itself unable to service outstanding debt.

The complex creditor landscape of today though makes governments reluctant to entertain sovereign debt restructuring. The landscape of sovereign borrowing has evolved from a small group made up of multilateral organisations, a few commercial banks, and the ‘Paris Club’ of rich countries to something much more complicated. In recent decades, emerging markets and developing economies have borrowed proportionately more from international bond markets with their dispersed private investors, and tapped new non-Paris Club lenders like China. From the sovereign’s perspective, this makes a potential debt restructuring operation particularly complicated.

The first step in any restructuring is calculating how much a country owes and to whom. This involves sharing detailed information on all categories of sovereign debt denominated in foreign currency, including collateralised liabilities and the debts of state-owned enterprises. The adoption of an IMF programme may be conditioned as a part of a restructuring to underwrite the data, economic plan and the promise of macroeconomic and fiscal supervision.

Lenders will weigh the upfront losses of a debt standstill and restructuring against the total magnitude of

losses in the event of a default. In entering restructuring talks, though, they will also demand to do so on the principle of comparable treatment of creditors in any proposed debt reprofilings and restructurings. Lenders will be mindful that any relief offered does not give preferential treatment to other creditors, especially in the face of new geopolitical power rivalries. This would typically mean that a country in distress asks for debt relief from friendly governments to whom it owes money and then seeks a comparable deal from private lenders.

The Holdout Problem

Over the past decades, there has been progress in governance frameworks to deal with sovereign debt crises, but considerable gaps persist. In the COVID-19 era, the G-20 Common Framework for Debt Treatments apply only to low-income countries (LICs), and even then, do not compel the participation of private creditors. Emerging markets that have undergone debt restructuring most recently (e.g. Argentina and Ecuador) are categorised in academic research as countries with a track record of serial default – i.e. more than two default spells or episodes. Given research evidence that countries that have defaulted on their debt obligations in the past are more likely to default again in the future, creditors have an added incentive to enter into negotiations in such cases.

All told, with the creditor landscape transformed, debt restructuring is still very much a matter of ad hoc negotiations between a sovereign and its creditors.

The creditors are aware of their special legal protection that comes down to a question of money due but not paid. At the same time, creditors too have virtually no choice but to negotiate as there will be inadequate assets to satisfy every creditor’s claims even with a successful legal remedy. In the extreme, ‘vulture funds’ have used litigation as an investment strategy to buy the debt at a hefty discount and pursue full payment through the courts. Confronted with this reality, a negotiated resolution should appeal to both creditors and debtor country.

At the centre of such a coordinated effort will be creditor (especially bondholder) committees. The composition of such committees – inclusive of large institutional investors, hedge funds, etc. – is critical to obtain a relatively quick resolution. However, there are no guarantees of fast and efficient mechanisms, and countries still risk fighting creditor lawsuits from those who may hold out.

Such potential holdout creditors may not necessarily take the view that what is good for the many is always good for the few. A disgruntled holdout creditor has the leverage to cause disturbing headlines, especially when countries resume bond market access once again at some point. Holdout creditors can be reined in through exit consents – where a majority of holders can amend terms, or as more commonly used now, employ collective action clauses (CACs) in bond agreements to bind minority holders. In the latter case, a specified supermajority of holders (usually 75%) can bind a minority to the terms of a debt restructuring. But much depends on whether a debtor country’s outstanding stock of international sovereign bonds contains these clauses. Some countries have also adopted anti-vulture fund legislation that limits holdout creditor recovery as a deterrent.

Net Benefit Calculation

High uncertainty during a restructuring, and the risk of prolonged negotiations means debt restructuring is still the last resort, to be done only if you must. A restructuring is a costly exercise with reputational downsides, loss of market access and more expensive debt issuances, weighed down further by concerns about adverse legal implications. For policymakers, a decisive step can be taken after a careful net benefit calculation of whether a country’s economic conditions are likely to deteriorate further without a restructuring, or whether a timely restructure may reduce the total magnitude of upfront losses and return debt to a sustainable level at the lowest cost to both the country and its creditors.

Link to Talking Economics blog: https://www.ips.lk/talkingeconomics/2022/01/12/sri-lankas-sovereign-foreign-debt-to-restructure-or-not/

Dr Dushni Weerakoon is the Executive Director of the Institute of Policy Studies of Sri Lanka (IPS) and Head of its Macroeconomic Policy research. She joined IPS in 1994 after obtaining her PhD, and has written and published widely on macroeconomic policy, regional trade integration and international economics. She has extensive experience working in policy development committees and official delegations of the Government of Sri Lanka. Dushni Weerakoon holds a BSc in Economics with First Class Honours from the Queen’s University of Belfast, U.K., and an MA and PhD in Economics from the University of Manchester, U.K. (Talk with Dr Dushni – dushni@ips.lk)

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Business

A nation reframed through food: Sri Lanka’s historic National Geographic debut

Published

16 hours ago

2026/02/19

Sahan Weerasooriya

By Ifham Nizam

On a bright Colombo morning, beneath the polished lines of Cinnamon Life at City of Dreams Sri Lanka, Sri Lanka quietly redrew the contours of its global image.

This was not merely a programme launch. It was a recalibration.

For the first time, a Sri Lankan-made food and travel series will premiere across South Asia on National Geographic — a platform synonymous with global storytelling. In a region where culinary diplomacy has long been monopolised by larger neighbours, Sri Lanka has chosen its entry point carefully: flavour.

Jayaflava: Celebrating Sri Lanka is a six-part travel and food series hosted by Tasha Marikkar, airing on National Geographic South Asia. It premieres on Friday the 20th at 8.00 p.m., with a repeat on Sunday at 1.00 p.m. The series will broadcast across India, Sri Lanka, Bangladesh, Nepal and the Maldives — positioning Sri Lanka’s culinary identity before one of the most dynamic regional audiences in the world.

The series is the brainchild of Marikkar — author, food storyteller and an unapologetic champion of Sri Lankan cuisine. What began as a cookbook evolved — through persistence, private backing and creative risk — into a broadcast production that now carries Sri Lanka’s culinary narrative beyond its shores.

“This was never just about recipes,” Marikkar told the audience. “It was about representing Sri Lanka as it truly is — multi-ethnic, modern, chaotic, generous and absolutely obsessed with flavour.”

Her long-time collaborator Afdhel Aziz framed it in strategic terms.

“Sri Lanka has always had depth and brilliance,” Aziz said. “What it hasn’t always had is ownership of its narrative. When you tell your story authentically on a platform like National Geographic, you’re not just entertaining — you’re reframing perception.”

Perception, in tourism economics, is currency.

Bakmee Perera Vice President – Communications Planning and Media Strategy at Dentsu Grant Media, described the partnership with National Geographic India — part of the Jio Star Network and Disney International — as a structural milestone.

“This marks Sri Lanka’s first long-term content partnership agreement with an international network,” she said. “It extends beyond linear television into digital platforms. It is a significant step in global content affiliation.”

For Sri Lanka’s hospitality industry, the timing is strategic. Indian arrivals have rebounded strongly, surpassing pre-2018 levels, and industry leaders see culinary storytelling as a natural extension of destination branding.

Kamal Munasinghe, Senior Vice President – Colombo Hotels at Cinnamon Hotels & Resorts and General Manager of Cinnamon Life, put it plainly.

“We have always spoken about sun, sea and sand,” he said. “But we have not spoken enough about our food. Other destinations have built tourism identities around cuisine. Sri Lanka has not done enough in that space.”

He recalled stopping on the roadside en route to Ella for oil roti served with mushroom curry — a humble meal prepared by a woman supporting her family.

“That is the story we are bringing to the world,” he added. “There is culture, resilience and love in that plate.”

Cinnamon Hotels & Resorts, the title sponsor, features four of its properties in the series, including Cinnamon Grand Colombo, Cinnamon Wild Yala and Cinnamon Bentota Beach — the latter a tropical modernist icon designed by Geoffrey Bawa.

Bawa once reframed Sri Lanka architecturally, merging landscape with structure in ways that drew global admiration. In many respects, Jayaflava attempts a similar reframing — merging food, people and place into a narrative that feels both intimate and expansive.

The series moves through midnight kottu stalls, animated kitchen debates, artists’ studios and coastal bars. It captures contradiction — humour alongside hardship, ambition alongside nostalgia. It is not polished tourism propaganda, but textured storytelling.

Sri Lanka has often been presented to the world as either idyllic escape or troubled headline. Rarely as complex, contemporary and confident. By choosing food — the most universal of connectors — as its narrative vehicle, the country sidesteps cliché and leans into authenticity.

As the morning launch concluded, one message lingered: this is not simply a television debut. It is soft power in motion.

A nation, reframed — one dish at a time.

Business

Bourse buoyed by IMF chief’s positive observations

Published

16 hours ago

2026/02/19

Sahan Weerasooriya

CSE grading was brisk and investor sentiment rose to a great extent when

the International Monetary Fund’s Managing Director Kristalina Georgieva, who is on a visit to Sri Lanka, made positive remarks on the progress of the local economy.

She made these comments after meeting President Anura Kumara Dissanayake and other relevant officials.

Consequent to these developments both indices moved upwards. The All Share Price Index went up by 37.02 points, while the S and P SL20 rose by 47.12 points.

Turnover stood at Rs 5.66 billion with nine crossings. Those crossings were reported in ACL Cables, where 1.5 million shares crossed to the tune of Rs 154.6 million; its shares traded at Rs 103,CW Macky two million shares crossed for Rs 82 million; its shares sold at Rs 41, Dipped Products 1 million shares crossed for Rs 61 million; its shares traded at Rs 58.

Colombo Dockyard 350,000 shares crossed to the tune of Rs 56.3 million; its shares traded at Rs 151, HNB 100,000 shares crossed for Rs 45.5 million; its shares traded at Rs 455,Royal Ceramics 500,000 crossed for Rs 25.5 million; its shares sold at Rs 51 and JKH one million shares crossed to the tune of Rs 22.4 million; its shares sold at Rs 22.40.

In the retail market top seven companies that mainly contributed to the turnover were; Softlogic Capital Rs 511 million (51.2 million shares traded), ACL Cables Rs 439 million (4.2 million shares traded), Asia Siyaka Rs 307 million (19.5 million shares traded), Sampath Bank Rs 251 million (1.6 million shares traded), HNB Rs 231 million (507,000 shares traded), Softlogic Finance Rs 205 million (31.4 million shares traded) and HNB Finance Rs 171 million (19 million traded). During the day 289.2 million share volumes changed hands in 42524 transactions.

It is said that the banking and manufacturing sectors performed well. Sampath Bank, for instance, was notable. Financial sector too performed well; especially Softlogic Finance.

Yesterday the rupee was quoted at Rs 309.42/44 to the US dollar in the spot market from Rs 309.40/50 the previous day, dealers said, while bond yields were broadly steady.

A bond maturing on 15.10.2029 was quoted at 9.40/45 percent.

A bond maturing on 01.03.2030 was quoted flat at 9.50/53 percent.

A bond maturing on 15.03.2031 was quoted at 9.70/75 percent, from 9.68/72 percent.

A bond maturing on 01.10.2032 was quoted at 10.10/42 percent, up from 10.10/13 percent.

A bond maturing on 01.06.2033 was quoted at 10.38/43 percent, up from 10.35/40 percent.

A bond maturing on 15.06.2036 was quoted at 10.60/65 percent.

An auction of Rs. 60,000 million Treasury bills was going on.

By Hiran H Senewiratne

Business

A photograph of a Jaffna youth becomes a global symbol for Sri Lanka’s stalled reconciliation

Published

16 hours ago

2026/02/19

Sahan Weerasooriya

In the world of travel photography, some images do more than showcase a destination; they act as a silent mirror to a nation’s unresolved history. When British photographer Mark Julian Edwards’ portrait, ‘The Boy on the Bus,’ claimed the People’s Choice Award at the 2026 Travel Photographer of the Year (TPOTY) awards, it did more than celebrate technical brilliance. It signaled that the global community is still fixated on the scars of a region where the promise of a post-2009 peace has yet to be fully realised.

While the current NPP government often celebrates a ‘reunited’ Sri Lanka under President Anura Kumara Dissanayake, this award-winning shot turns the gaze toward Jaffna – a city that remains the emotional and political epicenter of the North-South divide. Captured through a rusting bus window, the boy’s expression – described as ‘fragile yet incredibly resilient’ – speaks to the persistent chasm between the North and the South that has remained unbridged nearly two decades after the war’s end.

Whatever the rhetoric from political platforms regarding the end of distrust, the international resonance of this image suggests that the world recognises a different reality. The capture of a northern commute is not merely a travel detail; it is a reminder of a landscape where the path to a predictable future is still viewed through a prism of distrust and uncertainty.

The significance of this win lies in its source: the public vote. Out of 20,000 entries, thousands of people from 160 countries chose this specific face. This global endorsement serves as a poignant reminder that while the local reconciliation process may be stalled in policy and paperwork, the human element of the conflict continues to haunt the international imagination.

The boy represents a generation born after the guns fell silent, yet his quiet, searching eyes reflect the weight of a reconciliation process that many feel has been more about infrastructure than true social healing. In the North, where the dust of history is still settling, such images strip away the veneer of normalcy to reveal the underlying scars that politicians often ignore.

The success of Edwards’ work comes at a time when the Sri Lankan Tourism Bureau and Jetwing Hotels are looking to nurture the next generation of local storytellers. However, the global acclaim for ‘The Boy on the Bus’ suggests that the most vital stories to be told are not the ones that look like postcards, but the ones that acknowledge the sensitivity and professional excellence required to document a people still waiting for a ta truly inclusive future.

As this image makes its way into international galleries and media outlets like the BBC, it stands as a testament to a hard truth: a photograph can win international accolades but the bridging of the political and social chasm remains Sri Lanka’s true, unfinished business.

The 2026 Travel Photographer of the Year winners were showcased and celebrated in Sharjah – UAE, Birmingham – UK and Rome – Italy. This year’s programme includes a special mentorship and winners’ trip to Sri Lanka, hosted by the Sri Lanka Tourist Board and Jetwing Hotels.

By Sanath Nanayakkare