Prof. Lee. C. Buchheit,  one of the world's leading debt restructuring experts, said international credit rating agencies downgrading Sri Lanka should not be a major worry for Sri Lanka at this point in time.

“This will only be a big concern if you are trying to re-access the global capital market in the near future. When the country announces the need for debt restructuring, rating agencies will downgrade the country to ‘selective default’ and this rating will remain until the restructuring is completed. Once this is done, they will upgrade the country to higher rating categories.” he said while speaking at the 'Sri Lanka Economic Outlook 2022' forum organised by NextGenSL and the Friedrich Naumann Foundation for Freedom in Sri Lanka.

Buchheit is an international expert with a 43-year legalcareer specializing in sovereign debt management. He has worked on over two dozen sovereign debt restructurings and he led the legal teams advising the sovereign debtors in the two largest sovereign debt workouts in history (Greece in 2012 and Iraq in 2005-08).  

“This will only be a major worry if Sri Lanka intends to issue additional International Sovereign bonds in the near future. I don’t think Sri Lanka is in a position to do so,” he said. 

Prof. H.D. Karunaratne, a prominent economist and the newly-appointed Vice Chancellor of the University of Colombo, Kasturi Chellaraja Wilson, Hemas Group CEO and Economist Deshal DeMel also spoke about Sri Lanka’s economic trajectory for the year and the options available at present.

"The problem Sri Lanka must ask itself at the moment is whether there is a plausible fiscal adjustment programme that can be implemented within the next two-three years. It is in this context that the option of seeking the support of the International Monetary Fund (IMF) should be assessed and analysed. The country can also proceed with borrowings from bi-lateral partners as long as the Government has a clear policy and the stamina to implement comprehensive reforms," he added.  

"Sri Lanka's creditors —be they bilateral or commercial  —will be interested in one critical question.  That would be; who are we going to share the pain with? Every sovereign bond restructuring boils down to one decision — How much of the country's pain should be borne by its citizens, and how much should be borne by the creditors," the international expert explained.