Sri Lanka has reached a final restructuring agreement for its external debt owed to its bilateral creditors. The crisis stricken island nation had defaulted on its external debt commitments in April 2022 during its worst ever economic crisis. With the assistance from Indian side and IMF’s financing package and government’s policy interventions, Sri Lanka has been making efforts to revive the economy. Experts believe that the debt restructuring is a key step in rebuilding Sri Lanka.
The island nation’s State Minister of Finance Shehan Semasinghe said on a social media post that the final agreement has been reached on debt restructuring between Sri Lanka and the Official Creditor Committee on the sidelines of the Paris Forum 2024 in Paris, France.
He added that the bilateral debt treatment agreements between Sri Lanka and Export Import Bank of China were also reached today. Mr. Semasinghe thanked the chair of Official Creditor Committee which includes India, France and Japan and the non OCC creditor, China for the support received from them. The provisions under the debt restructuring would include maturity extensions and moratorium without any hair cut while maintaining the ‘Net Present Value’ under a formula. Earlier in March this year, Sri Lanka President Ranil Wickremasinghe had told the Parliament that the debt restructuring would likely include Moratorium till December 2027 and repayment till 2042.
