Sri Lanka may end debt talks by September: President

Crisis-stricken Sri Lanka should be able to conclude newly-launched debt restructuring talks by September, or November at the latest, its president said yesterday, adding that the negotiations had made "remarkable" progress.

Sri Lanka secured a US$2.9 billion bailout from the International Monetary Fund (IMF) in March but must set up a debt restructuring framework by September to carry forward the programme, or risk undermining a slow economic recovery.

President Ranil Wickremesinghe's comment came as he began a meeting with Japanese Prime Minister Fumio Kishida at the latter's office in Tokyo, the capital.

"We have made remarkable headway as far as the debt restructuring talks are concerned," Wickremesinghe said.

"(We) should be able to conclude by September, or November the latest."

Kishida's meeting with the Sri Lankan leader, their first since last September, is unlikely to generate a new initiative but both sides would take stock of the efforts to restructure debt, a Japanese official told Reuters.

Last month, France, India and Japan unveiled a common platform for talks among bilateral creditors to co-ordinate restructuring of the debt.

The island nation defaulted on its foreign debt for the first time in its history in April last year as the worst financial crisis since independence from Britain in 1948 crushed its economy.

The IMF called this week for timely restructuring pacts with the country's creditors. The global lender said Sri Lanka's macroeconomic situation was improving, although earlier it had predicted the economy would contract this year.

Sri Lanka owes $7.1 billion to its creditors, with $3 billion owed to China, $1.6 billion to India and $2.4 billion to the Paris Club, a group of creditor nations.

Utilities regulator removed

Sri Lanka's parliament on Wednesday removed the head of the country's utilities regulator after he blocked a huge electricity tariff increase that was in line with demands from the IMF.

The legislature voted 123 to 77 to drop Janaka Ratnayake as the boss of the Public Utilities Commission with immediate effect, making him the first head of a utilities regulator to be sacked in Sri Lanka's history.

Ratnayake had resisted a second tariff increase of up to 275 per cent in February on top of a 264 per cent hike six months earlier at the height of an economic crisis.

The government overruled Ratnayake's objections and went ahead with February's rise, saying it was crucial to reduce losses at Sri Lanka's state-owned electricity company.

Efforts to balance the books at stateowned enterprises were key to qualifying for a $2.9 billion bailout in March from the International Monetary Fund.

The IMF had prescribed that Sri Lanka implement cost-based tariffs and the lender wanted energy subsidies removed ahead of releasing the first tranche of $330 million under the four-year package.

Sri Lanka's political opposition accused the government of undermining the independence of regulators by sacking the utilities chief.

"You are sending a bad message to the international community," said MP Lakshman Kiriella. "The government is telling the world that it will not allow independent commissions to function independently".