Sri Lanka debt deal a key milestone towards restoring debt sustainability, IMF says

COLOMBO: The World Monetary Fund (IMF) said on Thursday (Jun 27) that Sri Lanka’s agreements with China and other creditor international locations to restructure about US$10 billion in bilateral debt took the island nation a step nearer in direction of restoring debt sustainability.

“We hope that there’ll likely be swift progress on reaching agreements with exterior inner most collectors in the attain future,” Peter Breuer, IMF’s senior mission chief for Sri Lanka, said in a press release.

Sri Lanka restful needs to convince bondholders to restructure about US$12.5 billion in world bonds, on which the global lender said it hopes to appreciate swift progress in the attain future.

Sri Lanka signed agreements with China and other creditor international locations to restructure about US$10 billion in bilateral debt on Wednesday.

The switch brings Sri Lanka nearer to finalising a debt restructuring job that started in September 2022 after its reserves hit document lows and compelled the island nation to default on its foreign debt for the major time.

Sri Lanka will glance approval from its parliament on the deals on Jul 2, President Ranil Wickremesinghe said addressing the nation after the agreements have confidence been inked.

The agreements enable Sri Lanka to lengthen repaying its bilateral collectors till 2028 and extends the compensation length as much as 2043, he added.

Finalisation of the deals shaped segment of quite loads of key stipulations space by the IMF below a US$2.9 billion bailout programme signed in March 2023 that has helped the island nation tame inflation, stabilise its forex, and beef up government funds.

Sri Lanka’s financial system is anticipated to grow by 3 per cent in 2024, recuperating after a 2.3 per cent contraction final year.