Germany and Sri Lanka today signed a bilateral debt restructuring agreement, marking a significant milestone in Sri Lanka’s efforts to achieve debt sustainability and advance its economic recovery.

The agreement was signed by Chargé d’affaires of the German Embassy, Sarah Hasselbarth, on behalf of the Federal Republic of Germany, and Secretary of the Ministry of Finance, Dr. Harshana Suriyapperuma, on behalf of the Government of Sri Lanka.

Announcing the agreement, the German Embassy in Colombo said that the bilateral deal reflects the strong relations between Germany and Sri Lanka and underscores Germany’s commitment to supporting sustainable solutions for long‑term stability in Sri Lanka.  

The German Embassy further said that Germany continues to stand as a reliable partner in fostering international cooperation. (Newswire)

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SriLankan Airlines and the Government of Sri Lanka have announced that they have reached an agreement in principle with the Ad Hoc Group of Bondholders on the financial parameters of the restructuring of its USD 175 million in Guaranteed Bonds due June 2024.

Issuing a joint statement, the two parties said that the agreement was reached with six members of the Ad Hoc Group of Bondholders following restricted discussions during the restricted period, between 23 October and 19 November 2025.

SriLankan Airlines was joined by its financial and legal advisors, Lazard and Norton Rose Fulbright LLP, respectively, while the Ad Hoc Group of Bondholders were joined by their legal advisor, Akin Gump Strauss Hauer & Feld. The Ad Hoc Group of Bondholders controls approximately 55% the aggregate outstanding amount of the USD 175 million in Guaranteed Bonds (Notes). 

Under the in-principle agreed terms, and subject to the successful implementation of the restructuring in accordance with such terms, the Government will be discharged from its liability pursuant to the guarantee and benefit from substantial debt and immediate liquidity relief to maintain the hard-fought long-term sustainability of its public finances.

Under the agreed terms, the restructuring will include a 15% haircut on the total claim amount of the Notes, with the remaining balance to be exchanged for a combination of cash and medium-term Government bonds carrying a 4% interest rate.  

The in-principle agreed terms for the restructuring remain subject to final approval from Sri Lanka’s Cabinet of Ministers, as well as the non-objections of the International Monetary Fund (IMF) and Sri Lanka’s official Creditor Committee, pursuant to the Government’s commitments taken in the context of Sri Lanka’s overall public debt restructuring exercise. 

The terms of the in-principle agreed restructuring have been communicated to Sri Lanka’s Official Creditor Committee for their non-objection, as well as the IMF, to ensure compliance with Sri Lanka’s long-term debt sustainability. Upon their confirmation, the Parties expect to be able to implement the transaction by the end of the year. 

The implementation of the in-principle agreed terms will allow the company to complete the full normalization of its relations with its external creditors and to focus on ensuring the continuation of its operations. 

Full statement: 

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SriLankan Airlines and the Government of Sri Lanka have announced the unsuccessful conclusion of initial debt restructuring talks with a group representing over 50% of the airline’s US$175 million guaranteed bonds due in June 2024.

The restricted discussions, held between July 28 and August 1, included the company, the government, and six members of the Ad Hoc Group of Bondholders. Despite what both sides described as “constructive” talks, no agreement was reached on restructuring terms.

SriLankan Airlines presented a proposal offering bondholders a combination of cash—up to US$60 million via a tender offer—and an exchange into government bonds maturing in 2028. In return, holders would accept a haircut, receiving 80 cents on the dollar for voluntarily restructured bonds or 70 cents under mandatory terms triggered by collective action clauses.

The bondholder group countered with a proposal seeking full principal recovery via an exchange into 2028 sovereign bonds, payment of all accrued and unpaid interest in cash, and an early bird consent fee of 3% of the principal.

After reviewing the counterproposal, the airline and the government said the terms were “far from what is expected” and not viable within Sri Lanka’s IMF-backed debt sustainability framework. Consequently, the parties agreed to terminate the discussions.

The government noted that over 98% of eligible public debt has already been addressed through prior agreements, of which 92% has been implemented. It reiterated its commitment to equal treatment among all creditors and emphasized that SriLankan Airlines’ bonds are part of the broader restructuring perimeter. 

The details of the discussion were released in a filing on the Singapore Stock Exchange (https://www.sgx.com). (Newswire)

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The signing of the bilateral agreement between Sri Lanka and France regarding the external debt restructuring process took place yesterday, marking a significant milestone in Sri Lanka’s efforts to achieve debt sustainability, the Ministry of Finance said. 

The Finance Ministry said Secretary of the Ministry of Finance, Mahinda Siriwardana, signed on behalf of Sri Lanka and Assistant Secretary for Multilateral Affairs, Trade and Development Policies at the Directorate-General of the Treasury, William Roos, signed on behalf of France.

Issuing a statement, the Finance Ministry said that France has played a pivotal role in Sri Lanka’s debt restructuring journey, co-chairing the Official Creditor Committee alongside Japan and India. “Its leadership and constructive engagement have been instrumental in helping Sri Lanka navigate the complexities of economic reform and recovery.”

The Ministry of Finance further said that this spirit of cooperation has enabled Sri Lanka to make meaningful progress toward restoring debt sustainability.

The ministry added that the conclusion of the Exchange of Notes and signing of the Agreement will certainly pave the way to developing further the deep and longstanding bilateral relationships between the Governments of France and Sri Lanka. (Newswire)

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Sri Lanka and India signed a USD 930.8 million Debt Restructuring Deal recently on Sri Lanka’s present External Debt Restructuring Process. 

The signing of Bilateral Amendatory Agreements between the Government of Sri Lanka and the Export-Import Bank (EXIM) of India took place on March 25, 2025 and April 03, 2025, respectively. 

The deal concerns 07 Line of Credit and 04 Buyer’s Credit Facility agreements with the Government of India.

Secretary of the Ministry of Finance, Planning, and Economic Development, Mr. K.M. Mahinda Siriwardana, signed the agreements on behalf of the Sri Lankan Government.

General Manager of the EXIM Bank of India, Mr.Nirmit Ved, signed the Line of Credits, and Deputy General Manager of the EXIM Bank of India, Mr. Amith Kumar, signed the Buyer’s Credit Agreements.

The Government of India has played a pivotal role in spearheading Sri Lanka’s External Debt Restructuring Process, co-chairing the Official Creditor Committee alongside France and Japan. 

The conclusion of the bilateral Amendment Agreements is expected to pave the way for developing further the deep and longstanding bilateral relationships between the Governments of India and Sri Lanka. (Newswire)

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Key debt restructuring agreements between Sri Lanka, the Government of Japan and the Japan International Cooperation Agency (JICA) were signed today.

The agreement was signed in the presence of Japanese Ambassador Akio Isomata and Secretary to the Ministry of Finance Mahinda Siriwardena.

The debt restructuring agreements were signed at the Ministry of Finance today. (Newswire)

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The proposal presented by the President, as the Minister of Finance, to enter into an agreement on debt restructuring with the Hungarian Export Credit Insurance Private Limited has received Cabinet approval. 

According to the government, following the declaration of a sub-policy on the suspension of debt servicing for selected foreign government loans by the Government of Sri Lanka in April 2022, the debt restructuring process has commenced for the achievement of public loan sustainability.

At present, the optimization of the domestic debt program has been successfully completed, while the memorandum of understanding has also been signed with the Committee of Official Creditors relevant to the restructuring of foreign debts. 

As per the MOU, agreements for debt restructuring should be entered into with the relevant other countries, ensuring transparency and comparability. 

Accordingly, it has been planned to sign an agreement on debt restructuring between the Hungarian Export Credit Insurance Private Limited and the Government of Sri Lanka. 

The Hungarian Export Credit Insurance Private Limited has agreed to grant a loan concession through the revision of outstanding debts and all such revised loans will be covered under this proposed agreement. The Attorney General has given his clearance for this proposed agreement. 

As such, the Cabinet of Ministers has approved the proposal to enter into an agreement on debt restructuring with the Hungarian Export Credit Insurance Private Limited. (Newswire)

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The Sri Lankan authorities have reaffirmed their determination to persevere with their reform agenda and put the economy on a path of sustained and high growth, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva said.

Kristalina Georgieva said the continued support from international financial institutions and other official creditors, together with the participation of bondholders in a debt exchange consistent with debt sustainability, is necessary to underpin the success of these reform efforts.

“The IMF remains a steadfast partner in supporting Sri Lanka and its people and stands ready to assist the country achieve its economic and social reform goals,” she added, issuing a statement on Tuesday about Sri Lanka to Members of the Financial Community.

The IMF Managing Director further noted that the Sri Lankan authorities have been implementing an ambitious economic reform program supported by the IMF, which aims to restore debt sustainability and external viability, underpin broad macroeconomic reforms, and strengthen economic governance and transparency. 

“Sri Lanka’s economic reform program is supported by an SDR 2.286 billion (about US$3 billion), 48-month Extended Fund Facility arrangement, approved by the IMF’s Executive Board on March 20, 2023. The program has gotten off to a good start with the economy recovering, inflation remaining low, and reserves being accumulated. 

“Following the completion of two reviews, IMF staff reached staff-level agreement with the authorities on November 23 for the third review under the arrangement,” she said. 

Kristalina Georgieva further said in June 2024, Sri Lanka agreed on a memorandum of understanding with the Official Creditors Committee (OCC) and reached a final agreement with China EXIM Bank that would deliver a debt treatment by those creditors aimed at restoring debt sustainability consistent with IMF program parameters.

“Building on this progress, and following several months of constructive discussions, the agreements reached by the Sri Lankan authorities with both the Steering Committee of the Ad Hoc Group of external bondholders, and the Local Consortium of Sri Lanka, mark a significant step forward. 

“The terms of these agreements have been assessed by the Fund staff as being in line with the parameters of the IMF-supported program. Anchored by policies under the IMF-supported program, the successful implementation of these agreements will provide significant external debt service relief and further contribute to Sri Lanka’s efforts to restore debt sustainability.

“To capitalize on this momentum, rapid completion of the debt operation with high creditor participation would be vital for the success of the program. In parallel, the authorities continue to finalize other remaining debt restructuring agreements. This collective effort is key to supporting the success of Sri Lanka’s debt restructuring efforts,” the IMF Managing Director concluded. (Newswire)

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President Anura Kumara Dissanayake says the government expects it will finalize a staff-level agreement with the International Monetary Fund (IMF) by this Friday (23 Nov).

The President made the announcement while delivering the Government’s policy statement during the inaugural session of the 10th Parliament of Sri Lanka underway today. 

President Anura Kumara Dissanayake revealed that he expects the staff-level agreement to be signed by the 23rd of November 2024 adding that the journey going forward with the IMF is a decision move.

The President said that through this Sri Lanka can expect to receive positive news on the third tranche of the IMF’s Extended Fund Facility (EFF) programme this week. 

President Dissanayake further said that he is also hopeful that debt restructuring talks will be completed by December this year.

He said his party was elected to power at a time when discussions on debt restructuring with bilateral creditors and International Sovereign Bondholders were at the final stages.

“The reality in front of us now is that we have no time to check whether these agreements are beneficial or harmful to us, as these are the results of nearly 2 years of discussions. We cannot go forward if we continue through another 2 years to study and renegotiate the previous agreement,” he said.

President Dissanayake said as such, the government has decided to engage in discussions with bilateral creditors and enter into separate agreements with each nation. 

With International Sovereign Bondholders, as initial agreements have been drawn as of now, the President said the government expects to finalize restructuring by the end of December. 

President Anura Kumara Dissanayake said that through these means the government will be able to conduct successful negotiations with the IMF to strengthen Sri Lanka’s economy.  

The President revealed that these measures were possible following the recent discussions held with the Senior Mission Chief Peter Breuer and the IMF delegation which visited Sri Lanka soon after the Parliamentary election.

President Dissanayake said that the government held lengthy discussions with the IMF delegation during this visit. (Newswire)

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The Sri Lankan authorities’ confirmation that they endorse the targets set under the country’s IMF programme and intend to implement debt restructuring based on the terms agreed with international sovereign bondholders in September, reduces risks to the debt treatment process associated with the outcome of the presidential election on 21 September, says Fitch Ratings.

In its latest update, the ratings agency said the election of Anura Kumara Dissanayake, of the opposition Janatha Vimukthi Peramuna (JVP), as president in September had increased policy uncertainty, raising the risk that the government could launch challenges to key elements of the IMF programme, potentially delaying Sri Lanka’s foreign-currency debt restructuring. 

However, the Ministry of Finance announced on 4 October that consultations with the IMF and Sri Lanka’s Official Credit Committee had been successfully concluded, suggesting that any policy changes are unlikely to threaten the IMF programme or the debt treatment agreement-in-principle reached under the previous administration.

The Ministry also indicated that the consultation had agreed that the preliminary agreement adhered to the principle of comparability of treatment between official creditors and bondholders, and was compatible with the IMF programme’s terms. We view this as a positive sign for the restructuring process’s prospects.

Fitch has rated Sri Lanka’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘RD’ (Restricted Default) since May 2022, and the government is not currently servicing its foreign-currency debt. It may move the IDR out of ‘RD’ upon the sovereign’s completion of a commercial debt restructuring that it judges to have normalised the relationship with the international financial community. Sri Lanka’s post-default rating would depend upon our assessment of its credit profile. Fitch upgraded Sri Lanka’s Long-Term Local-Currency IDR to ‘CCC-‘ in September 2023, reflecting the completion of the local-currency portion of Sri Lanka’s domestic debt optimisation plan.

“We expect Sri Lanka’s government debt to remain relatively high, even if debt restructuring is completed successfully along the lines laid out in the agreements with its creditors. The IMF forecasts Sri Lanka’s gross general government debt/GDP ratio to decline only gradually to about 103% of GDP by 2028, from about 116% in 2022, after building in a local- and foreign-currency debt restructuring.

“The government’s revenue/GDP ratio remains low, but the effects of several revenue-raising measures passed since May 2022 are beginning to be felt. Revenue collection in 7M24 rose by about 43% yoy, well above the nominal GDP growth rate of 9.5% in 1H24. Our baseline projections assume an increase in revenue/GDP, from 11.4% in 2023 to 15.5% in 2026, reflecting the measures already in place. However, these forecasts could be affected, if the new government introduces fiscal reforms. The IMF programme’s targets offer some flexibility for changes in the government’s fiscal policy approach,” the rating agency said.

Fitch believes the president’s capacity to push through policy changes may depend partly on the outcome of the parliamentary election on 14 November. The JVP and its allies had relatively few seats in the outgoing legislature, though the trends evident in the recent presidential election suggest that there will probably be large changes in the makeup of the new chamber.

Fitch points out that the economy more broadly remains on a recovery trend. Real GDP growth was 5.0% yoy in 1H24, after contracting by 7.3% during 1H23. We expect the economy to expand by 3.9% in 2024 and to average growth of 3.6% over 2025-2026. External liquidity stresses have also eased, with foreign-exchange reserves hitting USD6.0 billion in August 2024, up almost 66% yoy. Nevertheless, the speed of the recovery in reserves is likely to be set back when Sri Lanka resumes external debt-service payments. (Newswire)

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Sri Lanka has signed agreements with 18 countries and three organizations concerning its debt restructuring, as of now, President Ranil Wickremesinghe revealed. 

President Wickremesinghe pointed out that moving forward, there is still work to be done according to these agreements. 

“Our initial negotiations were with the International Monetary Fund, where we reached an agreement. Next, we needed to negotiate with China and other countries. China was waiting to see if we would offer any special terms to other countries, and similarly, other countries were watching to see our approach toward China. After these complex negotiations, we finally reached a consensus. Concurrently, the authority for everyone to act on behalf of the International Monetary Fund has expired. We have signed agreements with 18 countries and three organizations,” he said. 

The President further said that next year, Sri Lanka must generate an income of Rs. 5 trillion and work accordingly. 

“This agreement can be compromised when political promises are made to provide services for free or to reduce taxes. If this happens, alternative funding sources must be found. For example, if VAT is reduced, income tax may need to be increased,” he explained. 

President Wickremesinghe noted that the target of raising Rs. 5 trillion remains fixed, but the methods to achieve this target can be adjusted, adding “We must remain committed to this goal.”

President Ranil Wickremesinghe made the remarks while addressing a meeting of legal professionals’ on Sunday (Aug 25). (Newswire)

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Despite receiving no support from the opposition, the government has successfully completed the debt restructuring program, and it will be officially announced in the coming days,” President Ranil Wickremesinghe said. 

President Ranil Wickremesinghe made these remarks while addressing the “Together We Win – Api Gampaha” rally in Kadawatha on Sunday.

Stating that even though he sought support from the opposition, the President said neither of the two opposition groups provided the necessary support.

“I worked not for personal gain but for the country’s benefit. However, neither the SJB nor the JVP provided the necessary support. While travelling around the world, they urge not to support us,” President Wickremesinghe said. 

“The future of our country cannot be determined solely by political agendas. I will not allow that. Politics should align with the country’s needs; otherwise, our country has no future. We must advance as a proud nation, making meaningful changes rather than issuing false promises,” he noted.

President Wickremesinghe emphasized that the country’s progress should not be driven by political agendas but by a shared vision for national development.

“I invite Sajith Premadasa and Anura Dissanayake to join us in this effort. Let’s embark on this journey together,” he said, extending an invitation to the Opposition party leaders. 

Representing the people of Gampaha district, Minister Prasanna Ranatunga proposed that President Wickremesinghe should stand as the presidential candidate in the upcoming election. 

The event saw the participation of over 15,000 attendees including 26 Ministers and MPs and 250 former local government members of the Sri Lanka Podujana Peramuna. (Newswire)

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Sri Lanka has successfully concluded discussions with the ad-hoc Bondholder Committee of International Sovereign Bonds (ISBs), reaching an agreement on restructuring terms, State Minister of Finance Shehan Semasinghe announced on Thursday. 

Taking to ‘X’, State Minister Semasinghe revealed that International Sovereign Bonds account for USD 12.5 billion out of the total external debt of USD 37 billion. 

The State Minister pointed out that this agreement is a crucial step in our efforts to restore debt sustainability in the country. 

He further said that these restructuring terms now require approval from the official creditor committee and the International Monetary Fund (IMF) to confirm the Comparability of Treatment and assess compliance with Debt Sustainability targets. 

“This marks another key milestone in our journey towards economic revival and strengthening. This milestone could be considered a reflection of the ambitious economic and governance reforms carried out by the government in line with the best practices adopted globally. These reforms have been pivotal in creating a more resilient and sustainable economic framework for the future,” he added. 

Sri Lanka defaulted for the first time on its foreign debt in May 2022 after its economy was driven to the brink by a slump in foreign exchange reserves.

Restructuring international bonds was one of the key conditions set by the IMF under a $2.9 billion bailout programme that helped Sri Lanka tame inflation, stabilise its currency, and improve public finances.

The latest agreement comes after Sri Lanka held a second round of formal talks with bondholders this week.

According to Reuters, the framework proposes a 28% haircut on face value and an 11% reduction on past interest with payments on the interest component to start in September. 

The outline proposes to swap four existing dollar-denominated bonds for a bundle of three fixed-income instruments. 

One is a standard or so-called “plain vanilla” bond that has a coupon of 4% and matures in 2028. The second is a series of macro-linked bonds, where payouts and principal will be adjusted according to the country’s economic performance – downwards in case the economy fails to hit the IMF baseline projections, and upwards if the economy outperforms.

A third instrument would be a so-called governance-linked bond. While the government’s regulatory statement did not detail the parameters to which the payout was linked, a source familiar with the situation said the country would have to pay investors less if it managed to achieve reforms demanded by the IMF and hit tax revenue targets.

The agreements come in the backdrop of Sri Lanka signing in late June an agreement with creditor nations including Japan, India and China to restructure about $10 billion in bilateral debt.

Sri Lanka now needs to present the proposal to all its bondholders who need to agree to the deal for the restructuring to be finalised.

The country, whose total external debt is $37 billion, also has to finalise arrangements with the China Development Bank to restructure debt of $2.2 billion, according to the latest finance ministry data. (Newswire)

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Tamil Progressive Alliance (TPA) Leader MP Mano Ganesan has accused the government of having postponed the scheduled Parliamentary debate on the recent debt agreements with bilateral creditors due to issues in the deal negotiated with private bondholders. 

Taking to ‘X’, MP Ganesan said the Parliamentary debate that was scheduled this week had not been postponed due to the demise of Tamil National Alliance (TNA) MP R. Sampanthan as claimed by the government. 

“It’s not because of late MP Sambanthan’s funeral but the government cancelled the debate because it has met with snags with private bondholders. Hence, the government was unable to provide MoU copies to the parliament finance committee. 

“There weren’t MoU copies! There wasn’t a debate!! Therefore, the debt restructuring process is INCOMPLETE,” he said.

Stating that the opposition wanted the debate so that all snags would be discussed, MP Ganesan said, however, they were under pressure to vote against the MoUs in parliament.  

“We of the #SJB_Alliance (the United People’s Alliance) acted with responsibility as the prime opposition, the govt-in-waiting. We had decided not to vote against it but to stay away from voting after the debate, if it had occurred. 

“We wanted positive messages sent to our bilateral debtors #OCC & #China that we are for restructuring,” he said. 

The TPA Leader said his party as a component party in the opposition alliance, appreciates the role played by India as one of the co-chairs of the OCC, along with Sri Lanka’s international friends France and Japan. 

MP Mano Ganesan pointed out that India’s single contribution of $4 Billion to Sri Lanka has been the prime most stabilisation element of its economy and helped Sri Lanka end queues in front of Gas and Fuel stations, and Food and Medical stores, bringing back the country to near normalcy and also helping reach the International Monetary Fund (IMF).

“It is obvious the Sri Lankan Government unsuccessfully tried to adopt the Debt Restructuring process with its local electoral calendar,” he said.

MP Mano Ganesan further stressed this is when the prime opposition and the bilateral debtors act with responsibility in the interest of Sri Lanka. 

Sri Lanka signed deals with China and other creditor nations to restructure about $10 billion in bilateral debt on June 26, helping it approach the end of a restructuring process that began in September 2022 after its reserves hit record lows and forced it to default on foreign debt for the first time.

Sri Lankan officials in Paris inked the agreement with the Official Creditor Committee (OCC) co-chaired by Japan, India and France which have lent a combined $5.8 billion. A separate agreement was also signed with China EXIM Bank to rework $4.2 billion of debt. (Newswire)

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President Ranil Wickremesinghe will make a special statement in Parliament tomorrow (July 02) about the debt restructuring agreements reached with creditor nations recently.

It is reported that however, the Parliamentary debate on the debt restructuring agreements reached with creditor nations, which was scheduled for 02 & 03 July, will be postponed.

The debate has been postponed in view of the demise of former Tamil National Alliance (TNA) Leader R. Sampanthan. 

Meanwhile, the remains of TNA member R. Sampanthan will lie in state at the Parliament on 03 July from 02.00 pm to 04.00 pm.

Tamil National Alliance (TNA) member and former Opposition Leader MP R. Sampanthan passed away at the age of 91 while receiving treatment at a private hospital in Colombo. (Newswire)

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The Sri Lankan Government’s successful debt sustainability process with bilateral creditors will provide the country with an advantage of approximately US $ 17 billion, Foreign Affairs Minister Ali Sabry said.

The development is also expected to facilitate successful negotiations on international sovereign debts as well, the Minister said, addressing a media briefing held at the Presidential Media Centre on Friday.

“We have now successfully completed debt restructuring with bilateral creditor countries. India, Japan, and France formed an Official Creditor Committee (OCC) for managing bilateral debt and we also held talks with China. As a result of these efforts, Sri Lanka has achieved a sustainable debt repayment situation, gaining an advantage of approximately US $ 17 billion and numerous other benefits,” the Minister said. 

Ministery Sabry stressing that comprehensive debt restructuring must adhere to a specific timeline set by the IMF, said that the total debt burden should be reduced to 95% of the Gross Domestic Product (GDP).

Meanwhile, the current interest payments on foreign loans should be limited to 4.5% of the GDP, the Minister said. (Newswire)

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The Committee on Parliamentary Business has decided to take up for debate in Parliament the Resolution for the implementation of Sri Lanka’s External Debt Restructuring Agreements, on 02 and 03 July 2024.

According to a Parliament statement, this was decided at the meeting of the Committee on Parliamentary Business held this morning (June 28) under the chairmanship of Speaker Mahinda Yapa Abeywardena and with the participation of Prime Minister Dinesh Gunawardena.

Accordingly, the Parliament is scheduled to meet on Tuesday (02 July) at 9.30 am and it has been decided to hold the debate until 5.00 pm. The President is also scheduled to make a special statement to Parliament on that day regarding the implementation of external debt restructuring agreements.

The debate will continue for the second day on Wednesday (03 July) from 9.30 am to 5.00 pm. Subsequently, the vote on this resolution is scheduled to be held at 5.00 pm on the same day.

This resolution is submitted to the Parliament to grant the necessary permission to the Minister of Finance, Economic Stabilization and National Policy to implement the Final Agreement reached between Sri Lanka and the Official Creditor Committee (OCC) on Debt Restructuring and the Final Amendment Agreement to Loan Agreements reached between Sri Lanka and the Export-Import Bank of China (EXIM Bank) this week.

Sri Lanka signed deals with China and other creditor nations to restructure about $10 billion in bilateral debt on Wednesday (June 26), helping it approach the end of a restructuring process that began in September 2022 after its reserves hit record lows and forced it to default on foreign debt for the first time.

Sri Lankan officials in Paris inked the agreement with the Official Creditor Committee (OCC) co-chaired by Japan, India and France which have lent a combined $5.8 billion. A separate agreement was also signed with China EXIM Bank to rework $4.2 billion of debt. (Newswire)

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The International Monetary Fund (IMF) says Sri Lanka’s agreements with China and other creditor nations to restructure about $10 billion in bilateral debt brought it a step closer towards restoring debt sustainability.

According to Reuters, IMF’s senior mission chief for Sri Lanka, Peter Breuer said on Thursday “We hope that there will be swift progress on reaching agreements with external private creditors in the near future”.

Sri Lanka signed deals with China and other creditor nations to restructure about $10 billion in bilateral debt on Wednesday, helping it approach the end of a restructuring process that began in September 2022 after its reserves hit record lows and forced it to default on foreign debt for the first time.

Sri Lankan officials in Paris inked the agreement with the Official Creditor Committee (OCC) co-chaired by Japan, India and France which have lent a combined $5.8 billion.

The committee is now awaiting details of a separate agreement that was signed with China EXIM Bank to rework $4.2 billion to be shared with them to ensure comparability of treatment, OCC said in a statement.

Sri Lanka, however, still needs to convince bondholders to restructure about $12.5 billion in international bonds.

Bilateral lenders said they hoped an agreement with bondholders would be “on terms at least as favourable as the terms offered by the OCC.”

The restructuring of bilateral debt agreements was one of the key conditions set by the IMF under a $2.9 billion bailout programme that helped Sri Lanka tame inflation, stabilise its currency, and improve government finances. (Newswire)

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Sri Lankan officials and global investors are expected to hold a second round of direct talks this week to agree on the restructuring of $12 billion in defaulted bonds, it was reported.

Citing people familiar with the matter, Bloomberg News reported that a group of bondholders, known as the steering committee, will continue to negotiate the government’s new proposal in this round of the talks.

The sources further said that the bondholders went “restricted,” meaning the conversations with the government are covered by temporary trading limitations because the topics under discussion may be market-sensitive. 

In February, Sri Lanka sent a proposal to holders of dollar bonds as part of its plan to overhaul $27 billion of foreign debt, including bonds and loans. The restructuring is critical to ensure financing from the IMF bailout keeps flowing. 

Sri Lanka needs to reach deals with both bondholders and bilateral lenders to keep receiving IMF disbursements under a $3 billion program. 

According to an earlier report by Bloomberg News, the government and a group of creditors including India and the Paris Club were in advanced talks over a deal. (Newswire/ Bloomberg)

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China is ready to continue providing assistance to Sri Lanka’s socio-economic development, supporting the country’s debt sustainability, the Chinese Foreign Ministry has said.

China’s Foreign Ministry Spokesperson Lin Jian responded to a question by reporters on the progress of reaching a final agreement between Sri Lanka and China’s Exim Bank and the China Development Bank.

“Chinese side has been providing assistance to Sri Lanka’s socioeconomic development to the best of our capability. We stand ready to continue to work with relevant countries and international financial institutions to support Sri Lanka’s debt sustainability,” he said, declining to comment further.

The question came after Sri Lanka and China concluded the 13th round of diplomatic consultations in Beijing, with the participation of Secretary of Foreign Affairs of Sri Lanka, Aruni Wijewardane, and Vice Minister of Foreign Affairs of the People’s Republic of China, Sun Weidong.

Both governments said that a range of matters, including debt restructuring, were discussed; however, they specified no details on reaching an in-principle deal.

China is Sri Lanka’s largest bilateral creditor and has indicated willingness to restructure external debt amounting to approximately US$37 billion.

President Ranil Wickremesinghe has expressed optimism this week that Sri Lanka will soon reach agreements with its official bilateral creditors, including India, Japan, and France.

China, however, did not join the official creditors’ platform, which negotiated the common debt treatment plan with Sri Lanka. (Newswire)

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