Sri Lankan authorities have imposed strict conditions on Lazard, the external debt advisory firm selected by the Government of Sri Lanka (GoSL), as its debt restructuring advisers on obtaining any local support services, sources close to the government told Finance Today.
It is said that several Sri Lankan consultants and advisory firms have approached Lazard via their US and French offices to act as their local agents and/or partners.
“As the debt restructuring process should be carried out in a transparent manner, we have imposed restrictions on the activities of the selected debt advisory firms. Their requests to hire locally will be evaluated deeply, But we have learnt that given the sensitivity of matters under review, Lazard has taken the decision not to retain a local partner”, Government sources said.
They said GoSL was in the process of finalising service contracts in the next few days covering the relevant debt advisory services. They said the services will be subject to strict terms and conditions.
Senior officials from Lazard and Clifford Chance, the legal advisors selected by GoSL, arrived in the island last Tuesday to sign the final agreements.
With the intervention of the Central Bank of Sri Lanka (CBSL), they are also scheduled to meet with the visiting International Monetary Fund (IMF) delegation.
Lazard has a high global reputation for Sovereign Debt Restructuring, providing the most technically advanced services with the highest professional approach possible. They do not maintain any relations with the political authorities of any of the countries in which it performs its duties except on a professional level.
Meanwhile, IMF stated that they cannot interfere in debt contracts between countries and their creditors. These are contracts to which the IMF is not a party.
It is always the member country’s decision whether to restructure its debt or not, and the IMF advises members to stay current on their obligations to the extent possible. The IMF cannot lend if a country’s debt is unsustainable unless the country is taking steps to restore debt sustainability.
The debt restructuring negotiations, and the specific terms of the debt restructuring, as well as the decision on what debt to be included in the restructuring, are left to the authorities in consultation with their legal and financial advisers.
The role of the IMFis to determine the financing envelope that needs to be filled with financing/debt relief based on a realistic debt sustainability analysis (DSA). Their effort is to ensure that debt restructuring achieves high creditor participation and restores debt sustainability consistent with the DSA. The IMF does not manage the debt restructuring process.
By Ishara Gamage
Lazard team escapes by a whisker!
A spokesman for SriLankan Airlines told Finance Today that Lazard officials were also on board the SriLankan Airlines flight UL 504 that was at risk of crashing on the 13th.
“The whole Lazard debt advisory team was aboard the flight” he said.
Meanwhile, issuing a statement SriLankan Airlines confirms that its pilots operating UL 504, which departed from London to Colombo on 13 June 2022, were able to safely commandeer the flight without an incident.
Contrary to news reports, SriLankan confirms that UL 504 was not at risk of a mid-air collision with another aircraft at any point. The vigilance of the pilots and the state-of-the-art communication and surveillance system onboard the aircraft enabled safe passage for UL 504.
Further, SriLankan Airlines commends the timely action of the pilots operating UL 504, which ensured the safety of all passengers, crew and equipment onboard UL 504.