"I extend my gratitude to our creditors, including China and the Exim Bank of China, India, Japan and France, who co-chair the Official Committee of Creditors," President Wickremesinghe said in a televised address on Wednesday evening.
The debt structuring agreement allows Sri Lanka to defer all bilateral loan payments until 2028 and also repay all loans on concessional terms, with an extended period until 2043, President Wickremesinghe said.
In an important step to recover from bankruptcy, Sri Lanka on Wednesday concluded negotiations with the Official Committee of Creditors (OCC) co-chaired by India, Japan, France and China Exim Bank. The other members of the OCC include Australia, Austria, Belgium, Canada, Denmark, Germany, Hungary, Korea, Netherlands, Russia, Spain, Sweden, United Kingdom and United States.
"Each creditor, including the OCC and China Exim Bank, agreed to extend maturity periods, initiate principal grace periods, and significantly reduce interest rates. These measures collectively alleviate Sri Lanka's short-term debt service obligations. Lanka, releasing resources for essential and crucial public expenditures for economic stabilization and growth," announcing the success of the long-awaited debt restructuring negotiation, the President's Media Division (PMD) said.
"This restructuring provides up to 92 percent relief on debt service payments during the IMF program, offering important fiscal breathing room crucial to prioritizing public services and stimulating economic growth," the PMD stated.When the president of Sri Lanka announced the completion of debt restraint negotiations, India's Ministry of External Affairs congratulated Sri Lanka for signing the agreement with the OCC.
"We congratulate the Government of Sri Lanka for the signing of the MoU between the Official Committee of Creditors and Sri Lanka on debt restructuring. This signifies the progress made by Sri Lanka in its stabilization and economic recovery," the Ministry of Foreign Affairs announced (MEA).
"India is steadfast in its commitment to the growth and prosperity of Sri Lanka, as demonstrated by the unprecedented assistance of $4 billion as well as the role played by India as co-chair of the OCC," Randhir Jaiswal, official spokesperson of the Ministry of Foreign Affairs. India wrote in a post on social media platform "Together with France and Japan, India has been steadfast in its commitment to the stabilization, recovery and growth of Sri Lanka's economy," the Indian High Commission in Colombo said in a statement.
"This was also demonstrated by India's unprecedented financial support of $4 billion to Sri Lanka. India was also the first creditor nation to convey financing guarantees to the IMF, paving the way for Sri Lanka to secure the IMF program," he said.
After the IMF approved the Extended Fund Facility (SEF Programme) for Sri Lanka on March 20, 2023, the OCC was launched in April 2023 to hold talks between Sri Lanka's bilateral creditors, including India, to finalize a debt restructuring plan for Sri Lanka. "India will continue to support Sri Lanka's economic recovery, including by promoting long-term investments in its key economic sectors," the High Commission assured.
In his address to the nation, President Wickremesinghe said the agreements would provide significant relief to the country's economy.
"In April 2022, Sri Lanka officially declared its inability to meet its debt obligations. Following this declaration, international trade transactions with Sri Lanka came to a standstill. No country is willing to enter into financial relations with a nation that is bankrupt and "Consequently, we were unable to obtain loans or even letters of credit. In this context, all projects financed by foreign loans in our country were paralyzed," President Wickremesinghe described. He said that with the achievement of the crucial milestone in restructuring. of debt, there are legal opportunities for these countries to resume all projects financed by external loans.
"Projects such as the development of Katunayake airport, light rail and expressway will resume. In addition, we can expect to initiate many new development projects," he assured.
He said that international confidence in Sri Lanka is reaffirmed as the bilateral creditors have reached an agreement, which serves as a kind of international backstop. "The world community, which previously refused to accept our letters of credit, is now willing to grant us a certificate of trust," said the President.
After the global economic crisis followed by the Covid-19 pandemic, Sri Lanka's economy was paralyzed without basic needs including food, medicine, fuel and cooking gas.
In April 2022, Sri Lanka declared bankruptcy announcing its inability to meet its debt obligations. India immediately came to the rescue of its southern neighbor by providing food, fuel, medicine and other financial services worth more than $4 billion.
The debt structuring agreement allows Sri Lanka to defer all bilateral loan payments until 2028 and also repay all loans on concessional terms, with an extended period until 2043, President Wickremesinghe said.
In an important step to recover from bankruptcy, Sri Lanka on Wednesday concluded negotiations with the Official Committee of Creditors (OCC) co-chaired by India, Japan, France and China Exim Bank. The other members of the OCC include Australia, Austria, Belgium, Canada, Denmark, Germany, Hungary, Korea, Netherlands, Russia, Spain, Sweden, United Kingdom and United States.
"Each creditor, including the OCC and China Exim Bank, agreed to extend maturity periods, initiate principal grace periods, and significantly reduce interest rates. These measures collectively alleviate Sri Lanka's short-term debt service obligations. Lanka, releasing resources for essential and crucial public expenditures for economic stabilization and growth," announcing the success of the long-awaited debt restructuring negotiation, the President's Media Division (PMD) said.
"This restructuring provides up to 92 percent relief on debt service payments during the IMF program, offering important fiscal breathing room crucial to prioritizing public services and stimulating economic growth," the PMD stated.When the president of Sri Lanka announced the completion of debt restraint negotiations, India's Ministry of External Affairs congratulated Sri Lanka for signing the agreement with the OCC.
"We congratulate the Government of Sri Lanka for the signing of the MoU between the Official Committee of Creditors and Sri Lanka on debt restructuring. This signifies the progress made by Sri Lanka in its stabilization and economic recovery," the Ministry of Foreign Affairs announced (MEA).
"India is steadfast in its commitment to the growth and prosperity of Sri Lanka, as demonstrated by the unprecedented assistance of $4 billion as well as the role played by India as co-chair of the OCC," Randhir Jaiswal, official spokesperson of the Ministry of Foreign Affairs. India wrote in a post on social media platform "Together with France and Japan, India has been steadfast in its commitment to the stabilization, recovery and growth of Sri Lanka's economy," the Indian High Commission in Colombo said in a statement.
"This was also demonstrated by India's unprecedented financial support of $4 billion to Sri Lanka. India was also the first creditor nation to convey financing guarantees to the IMF, paving the way for Sri Lanka to secure the IMF program," he said.
After the IMF approved the Extended Fund Facility (SEF Programme) for Sri Lanka on March 20, 2023, the OCC was launched in April 2023 to hold talks between Sri Lanka's bilateral creditors, including India, to finalize a debt restructuring plan for Sri Lanka. "India will continue to support Sri Lanka's economic recovery, including by promoting long-term investments in its key economic sectors," the High Commission assured.
In his address to the nation, President Wickremesinghe said the agreements would provide significant relief to the country's economy.
"In April 2022, Sri Lanka officially declared its inability to meet its debt obligations. Following this declaration, international trade transactions with Sri Lanka came to a standstill. No country is willing to enter into financial relations with a nation that is bankrupt and "Consequently, we were unable to obtain loans or even letters of credit. In this context, all projects financed by foreign loans in our country were paralyzed," President Wickremesinghe described. He said that with the achievement of the crucial milestone in restructuring. of debt, there are legal opportunities for these countries to resume all projects financed by external loans.
"Projects such as the development of Katunayake airport, light rail and expressway will resume. In addition, we can expect to initiate many new development projects," he assured.
He said that international confidence in Sri Lanka is reaffirmed as the bilateral creditors have reached an agreement, which serves as a kind of international backstop. "The world community, which previously refused to accept our letters of credit, is now willing to grant us a certificate of trust," said the President.
After the global economic crisis followed by the Covid-19 pandemic, Sri Lanka's economy was paralyzed without basic needs including food, medicine, fuel and cooking gas.
In April 2022, Sri Lanka declared bankruptcy announcing its inability to meet its debt obligations. India immediately came to the rescue of its southern neighbor by providing food, fuel, medicine and other financial services worth more than $4 billion.
