Sri Lanka has successfully concluded a final restructuring agreement for $5.8 billion of its debt with the Official Creditor Committee (OC...
Sri Lanka has successfully concluded a final restructuring agreement for $5.8 billion of its debt with the Official Creditor Committee (OCC) of its bilateral lenders in Paris, France. This significant agreement provides substantial debt relief, enabling Sri Lanka to reallocate funds to essential public services and secure concessional financing for development needs, according to the President’s Media Division (PMD).
State Minister of Finance Shehan Semasinghe announced, “We are pleased to confirm that a 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 also mentioned the ongoing process of signing bilateral debt treatment agreements with the Export-Import Bank of China.
Minister Semasinghe expressed gratitude to the OCC chairs—France, India, and Japan—as well as to all OCC members for their unwavering support. He commended the OCC Secretariat for their dedication to resolving Sri Lanka’s debt crisis, achieving a milestone that will bolster confidence in the nation’s economy and promote growth. The minister highlighted the pivotal role of President Ranil Wickremesinghe’s leadership in reaching this milestone.
The Sri Lankan government is set to sign the debt restructuring agreement with a group of creditor nations, a critical step towards stabilizing the country’s finances following its economic crisis. President Wickremesinghe updated his cabinet on the restructuring, with Cabinet spokesman Bandula Gunawardana affirming that the framework has been approved and details will be presented to parliament for transparency.
This agreement will enable creditor nations to resume lending to Sri Lanka, which faced an economic crash in 2022 due to a fall in foreign exchange reserves that led to a default on foreign debt. Following the agreement, Sri Lanka’s bonds saw a slight increase in value, continuing gains made since February.
In November, the finance ministry announced that the debt restructuring would cover approximately $5.9 billion of outstanding public debt, involving extended maturity of long-term borrowings and reduced interest rates. The majority of this debt is owed to Japan and India, the chairs of the OCC alongside France.
Sri Lanka still needs to finalize agreements on $12.5 billion owed to private bondholders and $4.2 billion in loans from the Export-Import Bank of China. Supported by a $2.9 billion bailout package from the International Monetary Fund, Sri Lanka’s economy is expected to grow by 3% in 2024 after two years of contraction.
For more details, refer to the official announcements from the President’s Media Division and updates from Reuters.
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