Sri Lanka's Colombo has reached a debt restructuring deal with international sovereign bondholders after protracted negotiations, state finance minister Shehan Semasingher said on Thursday, calling it a "crucial step" in the troubled country's efforts. liquidity to restore debt sustainability.
In a statement, Minister of State for Finance Semasinghe said an agreement on the terms of the restructuring was reached on Wednesday, completing Sri Lanka's debt restructuring process.
“The BIS (international sovereign bonds) represent 12.5 billion dollars of a total external debt of 37 billion dollars. This agreement is a crucial step in our efforts to restore debt sustainability,” Semasinghe said.
He added that the deal with private bondholders was subject to approval by the official committee of creditors of the nations, including India.
"This marks another key milestone on our path to economic revival and strengthening," he said.
Officials said the agreed expected haircut would amount to 28 percent, with an advance payment to ISB holders starting in September this year.
Officials said this completes Sri Lanka's debt restructuring process, which was a prerequisite for debt sustainability in the current $2.9 billion International Monetary Fund (IMF) bailout extended in March 2023 during a period of four years.
This follows the finalization of debt restructuring agreements with bilateral lenders, including India and China, in Paris on June 26, which President Ranil Wickremesinghe described as an “important milestone” in bolstering international confidence in the debt-ridden economy.
Sri Lanka declared its first sovereign default in mid-April 2022, after running out of foreign exchange reserves. The disruption of debt services meant that multilateral creditor nations and commercial lenders were unable to extend new financing to the country.
The government faced criticism from the main opposition after last week's announcement of bilateral debt restructuring, who claimed the government had failed to achieve the best solution for the country.
Dismissing opposition criticism of the debt restructuring as “inaccurate”, President Wickremesinghe, also Minister of Finance, said: “No bilateral creditor would accept a reduction in the principal amount. “Instead, concessions are allowed through extended payment periods, grace periods, and lower interest rates.”
A two-day parliamentary debate was postponed because the opposition demanded agreements be signed.
Wickremesinghe said he would present all agreements and documents related to the debt restructuring to a committee of Parliament once an agreement is reached with private bondholders.
In a statement, Minister of State for Finance Semasinghe said an agreement on the terms of the restructuring was reached on Wednesday, completing Sri Lanka's debt restructuring process.
“The BIS (international sovereign bonds) represent 12.5 billion dollars of a total external debt of 37 billion dollars. This agreement is a crucial step in our efforts to restore debt sustainability,” Semasinghe said.
He added that the deal with private bondholders was subject to approval by the official committee of creditors of the nations, including India.
"This marks another key milestone on our path to economic revival and strengthening," he said.
Officials said the agreed expected haircut would amount to 28 percent, with an advance payment to ISB holders starting in September this year.
Officials said this completes Sri Lanka's debt restructuring process, which was a prerequisite for debt sustainability in the current $2.9 billion International Monetary Fund (IMF) bailout extended in March 2023 during a period of four years.
This follows the finalization of debt restructuring agreements with bilateral lenders, including India and China, in Paris on June 26, which President Ranil Wickremesinghe described as an “important milestone” in bolstering international confidence in the debt-ridden economy.
Sri Lanka declared its first sovereign default in mid-April 2022, after running out of foreign exchange reserves. The disruption of debt services meant that multilateral creditor nations and commercial lenders were unable to extend new financing to the country.
The government faced criticism from the main opposition after last week's announcement of bilateral debt restructuring, who claimed the government had failed to achieve the best solution for the country.
Dismissing opposition criticism of the debt restructuring as “inaccurate”, President Wickremesinghe, also Minister of Finance, said: “No bilateral creditor would accept a reduction in the principal amount. “Instead, concessions are allowed through extended payment periods, grace periods, and lower interest rates.”
A two-day parliamentary debate was postponed because the opposition demanded agreements be signed.
Wickremesinghe said he would present all agreements and documents related to the debt restructuring to a committee of Parliament once an agreement is reached with private bondholders.
