Sri Lanka, on Thursday (June 29) began a five-day bank holiday as the crisis-hit nation is in the midst of restructuring $42 billion in domestic debt. Analysts say that this long bank closure will help absorb any shocks to the country’s market after the restructuring process is over.&nbsp;

<h2>The IMF and World Bank funding&nbsp;</h2>

Sri Lanka was able to get a nearly $3 billion bailout package from the International Monetary Fund (IMF) in March, to ease the overall public debt load which stood at a whopping $83.6 billion, nearly 130 per cent of the country’s GDP&nbsp;last year. This also followed the World Bank’s approval of $700 million in budgetary and welfare support for the island nation.

The aim is to use the funds to reduce this domestic debt to below 95 per cent of the GDP by 2032. The funding also comes months after India extended a $1 billion credit line for Sri Lanka. Around $500 million of the funds from the World Bank will be allocated for budgetary support, while the remaining $200 million will be for welfare support earmarked for those worst hit by the crisis. &nbsp;

ALSO READ |&nbsp;<a href="https://www.wionews.com/south-asia/sri-lanka-gets-imf-support-months-after-indias-credit-line-extension-for-economic-recovery-609961">Sri Lanka gets $700mn World Bank's support months after India's credit line extension for economic recovery</a>

In a statement, World Bank’s country director for Sri Lanka, Faris Hadad-Zervos, said, “Through a phased approach, the World Bank Group strategy focuses on early economic stabilisation, structural reforms, and protection of the poor and vulnerable.” He added, “If sustained, these reforms can put the country back on the path towards a green, resilient and inclusive development.”&nbsp;

<h2>What is this financial restructuring about?</h2>

The debt restructuring could involve the extension of the period over which the loan is repaid. This comes as Sri Lanka has been witnessing its worst economic crisis after it defaulted on its debt with international lenders for the first time since its independence from the British in 1948. &nbsp;

Recently, the government also reportedly pushed forward to reworking its foreign debt with bondholders and bilateral creditors, including China, Japan and India.&nbsp;

ALSO READ |&nbsp;<a href="https://www.wionews.com/south-asia/economy-on-the-road-to-recovery-says-sri-lanka-president-599338">Economy on the road to recovery, says Sri Lanka president</a>

Meanwhile, the $42 billion domestic debt will be worked on by exchanging shorter-term treasury bills for longer-term bonds in the overhaul, said Sri Lanka’s central bank chief, Nandalal Weerasinghe, last week, in a press conference.&nbsp;

<h2>What have the analysts said about the long bank holiday?</h2>

Local media reports citing analysts said that the long bank holiday was announced to help absorb any possible shocks from market reactions to significant financial announcements. “The government’s action to call an extended public holiday means it obviously saw the risk of bank runs,” Alex Holmes, a senior economist at Oxford Economics, told the BBC.

The process of restructuring involves the announcement of the strategy to its implementation following the approval from the cabinet and the parliament.

ALSO READ |&nbsp;<a href="https://www.wionews.com/business-economy/india-steps-up-rupees-internationalisation-for-sri-lankas-economic-recovery-589593">India steps up rupee's internationalisation for Sri Lanka's economic recovery</a>

“The long holiday would allow any day one loss – as the cash flows are adjusted in the banks – to be pushed to the next quarter,” said Udeeshan Jonas, chief strategist for Sri Lankan investment bank CAL, as quoted by the South China Morning Post.&nbsp;

Earlier this month, Weerasinghe, said that the government expects the “entire process to conclude while the markets are closed during these five days.” He also said that the internal analysis indicates that any shocks from the central bank's planned restructuring of the financial bills would be “manageable”.&nbsp;

(With inputs from agencies) 
 
 
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Sri Lanka, on Thursday (June 29) began a five-day bank holiday as the crisis-hit nation is in the midst of restructuring $42 billion in domestic debt. Analysts say that this long bank closure will help absorb any shocks to the country’s market after the restructuring process is over.

Sri Lanka, on Thursday (June 29) began a five-day bank holiday as the crisis-hit nation is in the midst of restructuring $42 billion in domestic debt. Analysts say that this long bank closure will help absorb any shocks to the country’s market after the restructuring process is over. The IMF and World Bank funding Sri Lanka was able to get a nearly $3 billion bailout package from the International Monetary Fund (IMF) in March, to ease the overall public debt load which stood at a whopping $83.6 billion, nearly 130 per cent of the country’s GDP last year. This also followed the World Bank’s approval of $700 million in budgetary and welfare support for the island nation. The aim is to use the funds to reduce this domestic debt to below 95 per cent of the GDP by 2032. The funding also comes months after India extended a $1 billion credit line for Sri Lanka. Around $500 million of the funds from the World Bank will be allocated for budgetary support, while the remaining $200 million will be for welfare support earmarked for those worst hit by the crisis. ALSO READ | Sri Lanka gets $700mn World Bank's support months after India's credit line extension for economic recovery In a statement, World Bank’s country director for Sri Lanka, Faris Hadad-Zervos, said, “Through a phased approach, the World Bank Group strategy focuses on early economic stabilisation, structural reforms, and protection of the poor and vulnerable.” He added, “If sustained, these reforms can put the country back on the path towards a green, resilient and inclusive development.” What is this financial restructuring about? The debt restructuring could involve the extension of the period over which the loan is repaid. This comes as Sri Lanka has been witnessing its worst economic crisis after it defaulted on its debt with international lenders for the first time since its independence from the British in 1948. Recently, the government also reportedly pushed forward to reworking its foreign debt with bondholders and bilateral creditors, including China, Japan and India. ALSO READ | Economy on the road to recovery, says Sri Lanka president Meanwhile, the $42 billion domestic debt will be worked on by exchanging shorter-term treasury bills for longer-term bonds in the overhaul, said Sri Lanka’s central bank chief, Nandalal Weerasinghe, last week, in a press conference. What have the analysts said about the long bank holiday? Local media reports citing analysts said that the long bank holiday was announced to help absorb any possible shocks from market reactions to significant financial announcements. “The government’s action to call an extended public holiday means it obviously saw the risk of bank runs,” Alex Holmes, a senior economist at Oxford Economics, told the BBC. The process of restructuring involves the announcement of the strategy to its implementation following the approval from the cabinet and the parliament. ALSO READ | India steps up rupee's internationalisation for Sri Lanka's economic recovery “The long holiday would allow any day one loss – as the cash flows are adjusted in the banks – to be pushed to the next quarter,” said Udeeshan Jonas, chief strategist for Sri Lankan investment bank CAL, as quoted by the South China Morning Post. Earlier this month, Weerasinghe, said that the government expects the “entire process to conclude while the markets are closed during these five days.” He also said that the internal analysis indicates that any shocks from the central bank's planned restructuring of the financial bills would be “manageable”. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Sri Lanka takes five-day bank holiday for domestic-debt restructuring amid economic crisis

The newly elected Anthony Albanese government in Australia has decided to offer an additional $25 million in emergency funds to the crisis-ridden country of Sri Lanka.

The newly elected Anthony Albanese government in Australia has decided to offer an additional $25 million in emergency funds to the crisis-ridden country of Sri Lanka. The money will be used to fast-track health and food supplies to the Sri Lankan public which has to run from pillar to post for the basic necessities. “Australia stands with the people of Sri Lanka, especially those experiencing severe hardship. It is in Australia’s national interest to strengthen Sri Lanka’s economic resilience and accelerate its recovery.” said Foreign Minister Penny Wong. The addition of $25 million takes Australia's contribution towards the island nation to $75 million. Reportedly, in June, Australia had committed $50 million. Also read | Sri Lanka govt asks Thailand to grant entry to Gotabaya Rajapaksa Australian Minister of Home Affairs Clare O’Neil had met then President Gotabaya Rajapaksa and announced the monetary help. “We will contribute an immediate 22 million dollars to the World Food Programme for emergency food assistance to help three million people in Sri Lanka meet their daily nutritional needs." read the statement. "Australia will also provide 23 million dollars in development assistance to Sri Lanka in 2022-23. These contributions are in addition to 5 million dollars recently provided to United Nations agencies for Sri Lanka," it further added. The island nation of Sri Lanka, housing 22 million people is going through its worst economic crisis since it gained independence in 1948. After the President, Prime Minister and other high-ranking officials deserted office, the entire country plunged into a state of crisis. The country has defaulted on its debts; faces an acute shortage of fuel, medicines and soaring food commodity rates. However, according to makeshift President Ranil Wickremesinghe, the emergency imposed in the country is expected to end this week. Read more: Situation in Sri Lanka 'stabilised', no need to extend emergency: President Wickremesinghe Moreover, it is being reported that former President Gotabaya Rajapaksa is expected to return to Sri Lanka after fleeing the country and submitting his resignation via email. (With inputs from agencies) WATCH WION LIVE HERE:

Australia commits another $25 million in emergency aid to Sri Lanka, takes total to $75 million

Amid Sri Lanka's deepening economic crisis, Bangladesh’s finance minister Mustafa Kamal warned that countries should "think twice" before agreeing to join China in its ambitious Belt and Road Initiative(BRI).

Kamal blamed China for not carrying out a rigorous study before forwarding its Belt and Road project which has plunged some countries into a debt crisis. The Bangladesh&nbsp;minister cited Sri Lanka's example which was involved in the controversial Hambantota&nbsp;project.

<a href="https://www.wionews.com/world/chinas-whitepaper-on-taiwan-reunification-and-respond-with-the-use-of-force-505428">Also Read:&nbsp;China's 'whitepaper' on Taiwan: 'Reunification' and 'respond with the use of force'</a>

The International Monetary Fund(IMF) had earlier said it would aid Bangladesh in its current economic crisis after it requested funding to ride out the financial shock due to escalating international fuel prices. Reports claim Bangladesh has asked for a massive $4.5 billion aid package from the IMF. Bangladesh's currency has plunged against the US dollar in recent months as the government has been forced to undertake strict austerity measures.

Watch:&nbsp;US invests billions to compete with China in semiconductor production

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Kamal's comments come as Bangladesh&nbsp;Prime Minister Sheikh Hasina met Chinese foreign minister Wang Yi on Sunday. Wang Yi had said China wanted to "enhance" the BRI project as part of "Bangladesh's Vision 2041".

Sri Lanka has also been negotiating with the IMF for a financial bailout after defaulting on its debts. The country has been thrown into political turmoil as people protested violently against the Rajapaksa regime as angry crowds in the country stormed the president's official residence prompting the leader to flee abroad.

Sri Lanka's new President Ranil Wickremesinghe&nbsp;has vowed to restore order however the country continues to experience economic woes while battling high inflation combined with fuel and electricity crises.

Kamal told the Financial Times of London that China should take the blame for debts due to the BRI project and it "cannot disagree" as it urged the Xi regime to focus on it since it was "very, very important” even as the minister claimed that Bangladesh is not at risk of defaulting on its debt like Sri Lanka.

(With inputs from Agencies)

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California records 827 Monkeypox cases, declares emergency

Amid Sri Lanka's deepening economic crisis, Bangladesh’s finance minister Mustafa Kamal warned that countries should "think twice" before agreeing to join China in its ambitious Belt and Road Initiative(BRI).

Amid Sri Lanka's deepening economic crisis, Bangladesh’s finance minister Mustafa Kamal warned that countries should "think twice" before agreeing to join China in its ambitious Belt and Road Initiative(BRI). Kamal blamed China for not carrying out a rigorous study before forwarding its Belt and Road project which has plunged some countries into a debt crisis. The Bangladesh minister cited Sri Lanka's example which was involved in the controversial Hambantota project. Also Read: China's 'whitepaper' on Taiwan: 'Reunification' and 'respond with the use of force' The International Monetary Fund(IMF) had earlier said it would aid Bangladesh in its current economic crisis after it requested funding to ride out the financial shock due to escalating international fuel prices. Reports claim Bangladesh has asked for a massive $4.5 billion aid package from the IMF. Bangladesh's currency has plunged against the US dollar in recent months as the government has been forced to undertake strict austerity measures. Watch: US invests billions to compete with China in semiconductor production Kamal's comments come as Bangladesh Prime Minister Sheikh Hasina met Chinese foreign minister Wang Yi on Sunday. Wang Yi had said China wanted to "enhance" the BRI project as part of "Bangladesh's Vision 2041". Sri Lanka has also been negotiating with the IMF for a financial bailout after defaulting on its debts. The country has been thrown into political turmoil as people protested violently against the Rajapaksa regime as angry crowds in the country stormed the president's official residence prompting the leader to flee abroad. Sri Lanka's new President Ranil Wickremesinghe has vowed to restore order however the country continues to experience economic woes while battling high inflation combined with fuel and electricity crises. Kamal told the Financial Times of London that China should take the blame for debts due to the BRI project and it "cannot disagree" as it urged the Xi regime to focus on it since it was "very, very important” even as the minister claimed that Bangladesh is not at risk of defaulting on its debt like Sri Lanka. (With inputs from Agencies) WATCH WION LIVE HERE California records 827 Monkeypox cases, declares emergency

Bangladesh minister slams China's BRI loans amid foreign minister Wang's visit

Global credit rating agencies have warned that cash-strapped Sri Lanka’s debt default process has begun, indicating that its "payment capacity is irrevocably impaired".

Fitch and S&amp;P Global ratings lowered their assessment of the island nation, which is facing its worst economic crisis since independence in 1948.

Thousands of protesters have been hitting the streets demanding the resignation of President Gotabaya Rajapaksa and his brother and Prime Minister Mahinda Rajapaksa, as inflation, food scarcity and lack of fuel continue to bite the citizens on account of dwindling foreign reserves.

On Thursday, hundreds of Sri Lankans celebrated their traditional new year opposite the president’s office, where they camped out for a sixth day demanding his resignation over the country's worst economic crisis.

S&amp;P Global Ratings lowered the island nation’s foreign currency rating to “CC” from “CCC” citing the unprecedented economic crisis brought upon by dried foreign reserves.

“Sri Lanka’s debt restructuring process is likely to be complicated and may take months to complete,” the agency said in a statement.

According to the financial service company, the “CC” rating stands for “default has not yet occurred, but is expected to be a virtual certainty”.

Similarly, Fitch Ratings downgraded the South Asian country’s assessment over its decision to suspend payments of foreign debt. It has put Sri Lanka at "near default".

"We will downgrade the [rating] once a payment on an issuance is missed and the grace period has expired,"&nbsp;the firm said in a statement on Wednesday.

The warning from the rating agencies came a day after the Sri Lankan government announced that it is temporarily defaulting on all of its foreign debts payments.

Also read |&nbsp;<a href="https://www.wionews.com/sports/arjun-ranatunga-urges-sri-lanka-players-to-stop-playing-in-ipl-and-stand-for-country-amid-economic-crisis-470543">Arjuna Ranatunga urges Sri Lanka players to stop playing in IPL and stand for country amid economic crisis</a>

Sri Lanka's Finance Ministry said it otherwise had an "unblemished record" of paying its dues since independence from the UK in 1948.

"Recent events, however... have eroded Sri Lanka's fiscal position that continued normal servicing of external public debt obligations has become impossible," it said in a statement on Tuesday.

Also read |&nbsp;&nbsp;<a href="https://www.wionews.com/south-asia/sri-lanka-defaulting-on-all-its-external-debt-rajapaksa-government-470410">Sri Lanka defaulting on all its external debt: Rajapaksa government</a>

The IMF had assessed Sri Lanka's debt to be unsustainable last month, the ministry noted.

Sri Lanka's foreign reserves stood at $1.93bn at the end of March. However, it has around $4bn in foreign debt payments due this year, reports BBC.

Watch |&nbsp;Sri Lankan protesters mark new year near president's office amid economic crisis

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(With inputs from agencies)

Global credit rating agencies have warned that cash-strapped Sri Lanka’s debt default process has begun, indicating that its "payment capacity is irrevocably impaired".

Global credit rating agencies have warned that cash-strapped Sri Lanka’s debt default process has begun, indicating that its "payment capacity is irrevocably impaired". Fitch and S&P Global ratings lowered their assessment of the island nation, which is facing its worst economic crisis since independence in 1948. Thousands of protesters have been hitting the streets demanding the resignation of President Gotabaya Rajapaksa and his brother and Prime Minister Mahinda Rajapaksa, as inflation, food scarcity and lack of fuel continue to bite the citizens on account of dwindling foreign reserves. On Thursday, hundreds of Sri Lankans celebrated their traditional new year opposite the president’s office, where they camped out for a sixth day demanding his resignation over the country's worst economic crisis. S&P Global Ratings lowered the island nation’s foreign currency rating to “CC” from “CCC” citing the unprecedented economic crisis brought upon by dried foreign reserves. “Sri Lanka’s debt restructuring process is likely to be complicated and may take months to complete,” the agency said in a statement. According to the financial service company, the “CC” rating stands for “default has not yet occurred, but is expected to be a virtual certainty”. Similarly, Fitch Ratings downgraded the South Asian country’s assessment over its decision to suspend payments of foreign debt. It has put Sri Lanka at "near default". "We will downgrade the [rating] once a payment on an issuance is missed and the grace period has expired," the firm said in a statement on Wednesday. The warning from the rating agencies came a day after the Sri Lankan government announced that it is temporarily defaulting on all of its foreign debts payments. Also read | Arjuna Ranatunga urges Sri Lanka players to stop playing in IPL and stand for country amid economic crisis Sri Lanka's Finance Ministry said it otherwise had an "unblemished record" of paying its dues since independence from the UK in 1948. "Recent events, however... have eroded Sri Lanka's fiscal position that continued normal servicing of external public debt obligations has become impossible," it said in a statement on Tuesday. Also read | Sri Lanka defaulting on all its external debt: Rajapaksa government The IMF had assessed Sri Lanka's debt to be unsustainable last month, the ministry noted. Sri Lanka's foreign reserves stood at $1.93bn at the end of March. However, it has around $4bn in foreign debt payments due this year, reports BBC. Watch | Sri Lankan protesters mark new year near president's office amid economic crisis (With inputs from agencies)

Sri Lanka’s debt ‘default process has begun’, warn credit rating agencies

The Sri Lankan government on Tuesday announced it is defaulting on all its external debt.

The government had earlier announced it had appointed a panel on restructuring foreign debt amid the deepening economic crisis.

The island nation has been hit by rising inflation and fuel crisis. Sri Lanka's economy was hit badly during the coronavirus pandemic as the tourism industry was hit amid the lockdown two years ago.

<a href="https://www.wionews.com/south-asia/sri-lankan-pm-mahinda-rajapaksa-says-government-is-working-to-overcome-economic-crisis-470293">Also Read:&nbsp;Sri Lankan PM says government working to overcome economic crisis</a>

"Sri Lanka has decided to suspend normal debt servicing of all affected debts for an interim period pending an orderly and consensual restructuring of those obligations in a manner consistent with an economic adjustment program supported by the IMF," the country's finance ministry said.

Rating agencies had earlier warned of a potential default on its $51 billion foreign debt.&nbsp;

Watch:&nbsp;Sri Lanka running out of life-saving medicines

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In a letter stating its interim policy on servicing external public debt, the government said the COVID-19 pandemic and the Ukraine war had "eroded Sri Lanka's fiscal position" with its normal servicing of external public debt obligations becoming "impossible".

"Although the government has taken extraordinary steps in an effort to remain current on all of its external indebtedness, it is now clear that this is no longer a tenable policy and that a comprehensive restructuring of these obligations will be required," it added.

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11,000 MT rice from <a href="https://twitter.com/hashtag/India?src=hash&amp;ref_src=twsrc%5Etfw">#India</a> reached <a href="https://twitter.com/hashtag/Colombo?src=hash&amp;ref_src=twsrc%5Etfw">#Colombo</a> on board ship Chen Glory today ahead of New Year celebration by people of 🇱🇰. 16,000 MT rice supplied under 🇮🇳's multi-pronged support to 🇱🇰 in the past week alone.These supplies which mark the special bond between 🇮🇳&amp;🇱🇰 will continue. <a href="https://t.co/PF3yE626hl">pic.twitter.com/PF3yE626hl</a>
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Amid the economic crisis, the Rajapaksa's cabinet had resigned en masse after people took to the streets to protest against rising&nbsp;prices.

The Lankan president had imposed a state of emergency and requested members of political parties to join the cabinet, however, it was ruled out by the opposition members.

The government said it is seeking financial help from other multilateral and bilateral partners including the IMF.

(With inputs from Agencies)

The Sri Lankan government on Tuesday announced it is defaulting on all its external debt. The government had earlier announced it had appointed a panel on restructuring foreign debt amid the deepening economic crisis.

The Sri Lankan government on Tuesday announced it is defaulting on all its external debt. The government had earlier announced it had appointed a panel on restructuring foreign debt amid the deepening economic crisis. The island nation has been hit by rising inflation and fuel crisis. Sri Lanka's economy was hit badly during the coronavirus pandemic as the tourism industry was hit amid the lockdown two years ago. Also Read: Sri Lankan PM says government working to overcome economic crisis "Sri Lanka has decided to suspend normal debt servicing of all affected debts for an interim period pending an orderly and consensual restructuring of those obligations in a manner consistent with an economic adjustment program supported by the IMF," the country's finance ministry said. Rating agencies had earlier warned of a potential default on its $51 billion foreign debt. Watch: Sri Lanka running out of life-saving medicines In a letter stating its interim policy on servicing external public debt, the government said the COVID-19 pandemic and the Ukraine war had "eroded Sri Lanka's fiscal position" with its normal servicing of external public debt obligations becoming "impossible". "Although the government has taken extraordinary steps in an effort to remain current on all of its external indebtedness, it is now clear that this is no longer a tenable policy and that a comprehensive restructuring of these obligations will be required," it added. 11,000 MT rice from #India reached #Colombo on board ship Chen Glory today ahead of New Year celebration by people of 🇱🇰. 16,000 MT rice supplied under 🇮🇳's multi-pronged support to 🇱🇰 in the past week alone.These supplies which mark the special bond between 🇮🇳&🇱🇰 will continue. pic.twitter.com/PF3yE626hl — India in Sri Lanka (@IndiainSL) April 12, 2022 × Amid the economic crisis, the Rajapaksa's cabinet had resigned en masse after people took to the streets to protest against rising prices. The Lankan president had imposed a state of emergency and requested members of political parties to join the cabinet, however, it was ruled out by the opposition members. The government said it is seeking financial help from other multilateral and bilateral partners including the IMF. (With inputs from Agencies)

Sri Lanka defaulting on all its external debt: Rajapaksa government