Uditha Jayasinghe, Alasdair Pala

COLOMBO, (Reuters) – All creditors of Sri Lanka will be treated equal in a restructuring plan for the country’s debt. The central bank governor stated Friday that progress was expected in negotiations with the International Monetary Fund, (IMF), in the coming two months.

Sri Lanka already defaulted on coupon payments for some of its bonds, and the IMF’s bailout talks with it include a bridge loan. Governor Nandalal Wierasinghe stated that.

He stated that all external creditors would be treated the same regardless of whether they were (sovereign bonds) holders or China or Japan, and warned creditors to not hold back.

The creditors should cooperate to ensure that debts are paid back as quickly and efficiently as possible. Weerasinghe stated that if one party delays, they can get their payments delayed.” Weerasinghe spoke at a news conference.

Sri Lanka’s economy was severely affected by the Pandemic and Tax Cuts by President Gotabaya Rajapaksa.

It has resulted in shrinking foreign currency reserves as well as shortages of fuel, food, and medicine that have led thousands to take to the streets and stage violent protests.

Although the central bank increased the interest rate by an unprecedented 700 basis points in October to try to control inflation and stabilize the economy’s health, figures from Friday revealed that most goods prices have continued to increase sharply.

According to data provided by Sri Lanka’s statistics ministry, food inflation in April was 46.6% year on year, as compared to 30.2% one month prior. Transport costs rose by 68.5% compared to 35.5% in March.

Weerasinghe explained that the rates had been significantly increased and would see this reflected in inflation figures over the following months. The control of supply-side inflation will take between two and three months.