Sri Lanka has reached a final restructuring agreement for USD 5.8 billion of debt with its bilateral lenders’ Official Creditor Committee (OCC) in Paris, France, on Wednesday. This agreement provides significant debt relief, enabling Sri Lanka to allocate funds to essential public services and secure concessional financing for its development needs, according to the President’s Media Division (PMD).
"This agreement grants significant debt relief, allowing Sri Lanka to allocate funds to essential public services & secure concessional financing for its development needs," the president's media office said in a statement.
Sri Lanka is also in the process of signing separate bilateral agreements with China EXIM Bank to restructure $4.2 billion of debt, State Minister of Finance Shehan Semasinghe said on social media platform X.
Sri Lanka’s State Minister of Finance, Shehan Semasinghe, confirmed the final agreement on debt restructuring between Sri Lanka and the OCC on the sidelines of the Paris Forum 2024. He also mentioned ongoing processes to sign bilateral debt treatment agreements between Sri Lanka and the Export-Import Bank of China in a post on ‘X’ (formerly Twitter).
The state minister expressed gratitude to the OCC chairs - France, India, and Japan - as well as the Export-Import Bank of China (EXIM) for their leadership, and to all OCC members for their unwavering support. He commended the OCC Secretariat for their dedication in resolving Sri Lanka’s debt crisis and achieving this significant milestone, which will enhance confidence in the country’s economy and foster growth. Minister Semasinghe also acknowledged the leadership of President Ranil Wickremesinghe in steering the nation towards this achievement.
The Sri Lankan government was expected to sign the debt restructuring agreement with the group of creditor nations on Wednesday, marking a major step in stabilizing the country’s finances following its economic crisis. President Ranil Wickremesinghe had updated his Cabinet on the debt restructuring late on Monday, with the Cabinet approving the debt restructuring framework. Cabinet spokesman Bandula Gunawardana indicated that details of the agreement would be presented to parliament later for transparency.
The agreement will allow creditor nations to resume lending to Sri Lanka, whose economy crashed in 2022 when a fall in foreign exchange reserves led the island to default on its foreign debt. Sri Lanka’s bonds were up 0.2-0.3 cents in late Asian trading, slightly outperforming most emerging markets and maintaining over 15% gains made since February.
In November, Sri Lanka’s finance ministry stated that the debt restructuring agreement in principle covered approximately $5.9 billion of outstanding public debt, involving a mix of extending the maturity of long-term borrowings and reducing interest rates on the credit. The majority of the debt is owed to Japan and India, which chair the OCC along with France. A provisional agreement with the OCC was reached in November.
Sri Lanka, with roughly $37 billion in external debt, still needs to finalize agreements on $12.5 billion owed to private bondholders and a final deal with the Export-Import Bank of China on $4.2 billion in loans. 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.
"This agreement grants significant debt relief, allowing Sri Lanka to allocate funds to essential public services & secure concessional financing for its development needs," the president's media office said in a statement.
Sri Lanka is also in the process of signing separate bilateral agreements with China EXIM Bank to restructure $4.2 billion of debt, State Minister of Finance Shehan Semasinghe said on social media platform X.
Sri Lanka’s State Minister of Finance, Shehan Semasinghe, confirmed the final agreement on debt restructuring between Sri Lanka and the OCC on the sidelines of the Paris Forum 2024. He also mentioned ongoing processes to sign bilateral debt treatment agreements between Sri Lanka and the Export-Import Bank of China in a post on ‘X’ (formerly Twitter).
The state minister expressed gratitude to the OCC chairs - France, India, and Japan - as well as the Export-Import Bank of China (EXIM) for their leadership, and to all OCC members for their unwavering support. He commended the OCC Secretariat for their dedication in resolving Sri Lanka’s debt crisis and achieving this significant milestone, which will enhance confidence in the country’s economy and foster growth. Minister Semasinghe also acknowledged the leadership of President Ranil Wickremesinghe in steering the nation towards this achievement.
The Sri Lankan government was expected to sign the debt restructuring agreement with the group of creditor nations on Wednesday, marking a major step in stabilizing the country’s finances following its economic crisis. President Ranil Wickremesinghe had updated his Cabinet on the debt restructuring late on Monday, with the Cabinet approving the debt restructuring framework. Cabinet spokesman Bandula Gunawardana indicated that details of the agreement would be presented to parliament later for transparency.
The agreement will allow creditor nations to resume lending to Sri Lanka, whose economy crashed in 2022 when a fall in foreign exchange reserves led the island to default on its foreign debt. Sri Lanka’s bonds were up 0.2-0.3 cents in late Asian trading, slightly outperforming most emerging markets and maintaining over 15% gains made since February.
In November, Sri Lanka’s finance ministry stated that the debt restructuring agreement in principle covered approximately $5.9 billion of outstanding public debt, involving a mix of extending the maturity of long-term borrowings and reducing interest rates on the credit. The majority of the debt is owed to Japan and India, which chair the OCC along with France. A provisional agreement with the OCC was reached in November.
Sri Lanka, with roughly $37 billion in external debt, still needs to finalize agreements on $12.5 billion owed to private bondholders and a final deal with the Export-Import Bank of China on $4.2 billion in loans. 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.
