Colombo, Sri Lanka President Ranil Wickremesinghe announced on Wednesday that debt restructuring agreements with bilateral lenders, including India and China, have been finalized in Paris, describing the development as an "important milestone" that will bolster international confidence in the cash-strapped island nation.
In a televised address to the nation, President Wickremesinghe, who also holds the portfolio of Finance Minister, said that Prime Minister Dinesh Gunawardena will present these agreements to Parliament on July 2 for ratification.
"This morning in Paris, Sri Lanka reached a final agreement with our official bilateral creditors. Similarly, today we signed another agreement with China's Exim Bank in Beijing... Sri Lanka won...!!!" said a jubilant Wickremesinghe, who has led the effort to lift the island out of economic crisis since Sri Lanka declared its first sovereign default in 2022. The president described the development as a “major milestone,” saying: “With these agreements , we will be able to defer all payments of bilateral loan installments until 2028. In addition, we will have the opportunity to repay all loans on favorable terms, with an extended period until 2043.”
He extended his gratitude to creditors, including China and the Exim Bank of China, India, Japan and France, who co-chair the Official Committee of Creditors.
“Our next goal is to reach an agreement with trade creditors, which include holders of International Sovereign Bonds (ISBs),” he said. “The agreements we reached today will provide significant relief to our economy. In 2022, we will spend 9.2% of our gross domestic product (GDP) on external debt payments. With the new agreements, it will pave the way for us to keep debt payments at less than 4.5% of GDP between 2027 and 2032,” said the president.
Wickremesinghe also lashed out at “some people” who, he said, “tried to disrupt our progress and continue to do so, but failed to stop our journey.” In the future, these detractors will face the shame of having betrayed their country.”
Earlier in the day, the President's office said in a statement that Sri Lanka had reached a final $5.8 billion restructuring agreement with the official committee of creditors of its bilateral lenders in Paris. Wickremesinghe, 75, is expected to appear to the presidential elections in the coming months.
State Finance Minister Shehan Semasinghe announced that a final agreement has been reached on the bilateral treatment of debt between Sri Lanka and the Export-Import Bank of China.
"On behalf of Sri Lanka, I would like to sincerely thank the Presidents of the OCC (France, India and Japan) as well as the Export-Import Bank of China for their leadership in this process, as well as all members of the OCC for his unwavering support," he said. He also commended the OCC Secretariat for its dedication in finding a solution to our debt crisis and achieving this important milestone, which will improve confidence in Sri Lanka's economy and foster growth.
This agreement means that half of the external debt of the government of creditor countries and organizations has been restructured. Details of the restructuring have not yet been announced.
According to Treasury figures, at the end of March 2024, the stock of outstanding debt remained at USD 10,588.6 million. The official committee of creditors was formed by the Paris Club of Nations (Japan, the United Kingdom and the United States). , while the nations that did not belong to the Paris Club were China, India and the rest.
Once the agreement with bilateral creditors was sealed, the government was to hold another round of talks starting this week with private creditors and international sovereign bondholders for restructuring. As of March 2024, the outstanding balance of commercial loans amounted to US$14,735.9 million.
Earlier this week, posters reading "good news" appeared on city walls, appearing to be part of the political campaign about the success of the debt restructuring effort that took so long to achieve. In mid-April In 2022, Sri Lanka declared its first sovereign default since gaining independence from Britain in 1948.
The International Monetary Fund had conditioned the restructuring of the external debt to the rescue of 2.9 billion dollars, the third tranche of which was released last week.
Wickremesinghe oversaw the IMF program while implementing tough economic reforms prescribed by the global lender. On Sunday he made his first public statement on the presidential elections, which are likely to take place in the last quarter of this year.
Addressing a group of young people, he said elections could take place in September or October.
Wickremesinghe has not yet announced his candidacy, while two other main opposition leaders have already declared themselves in the race. In July 2022, Wickremesinghe was elected by parliament to become caretaker president for the remaining term of Gotabaya Rajapaksa, who He resigned after public protests over his inability to handle the economic crisis.
In a televised address to the nation, President Wickremesinghe, who also holds the portfolio of Finance Minister, said that Prime Minister Dinesh Gunawardena will present these agreements to Parliament on July 2 for ratification.
"This morning in Paris, Sri Lanka reached a final agreement with our official bilateral creditors. Similarly, today we signed another agreement with China's Exim Bank in Beijing... Sri Lanka won...!!!" said a jubilant Wickremesinghe, who has led the effort to lift the island out of economic crisis since Sri Lanka declared its first sovereign default in 2022. The president described the development as a “major milestone,” saying: “With these agreements , we will be able to defer all payments of bilateral loan installments until 2028. In addition, we will have the opportunity to repay all loans on favorable terms, with an extended period until 2043.”
He extended his gratitude to creditors, including China and the Exim Bank of China, India, Japan and France, who co-chair the Official Committee of Creditors.
“Our next goal is to reach an agreement with trade creditors, which include holders of International Sovereign Bonds (ISBs),” he said. “The agreements we reached today will provide significant relief to our economy. In 2022, we will spend 9.2% of our gross domestic product (GDP) on external debt payments. With the new agreements, it will pave the way for us to keep debt payments at less than 4.5% of GDP between 2027 and 2032,” said the president.
Wickremesinghe also lashed out at “some people” who, he said, “tried to disrupt our progress and continue to do so, but failed to stop our journey.” In the future, these detractors will face the shame of having betrayed their country.”
Earlier in the day, the President's office said in a statement that Sri Lanka had reached a final $5.8 billion restructuring agreement with the official committee of creditors of its bilateral lenders in Paris. Wickremesinghe, 75, is expected to appear to the presidential elections in the coming months.
State Finance Minister Shehan Semasinghe announced that a final agreement has been reached on the bilateral treatment of debt between Sri Lanka and the Export-Import Bank of China.
"On behalf of Sri Lanka, I would like to sincerely thank the Presidents of the OCC (France, India and Japan) as well as the Export-Import Bank of China for their leadership in this process, as well as all members of the OCC for his unwavering support," he said. He also commended the OCC Secretariat for its dedication in finding a solution to our debt crisis and achieving this important milestone, which will improve confidence in Sri Lanka's economy and foster growth.
This agreement means that half of the external debt of the government of creditor countries and organizations has been restructured. Details of the restructuring have not yet been announced.
According to Treasury figures, at the end of March 2024, the stock of outstanding debt remained at USD 10,588.6 million. The official committee of creditors was formed by the Paris Club of Nations (Japan, the United Kingdom and the United States). , while the nations that did not belong to the Paris Club were China, India and the rest.
Once the agreement with bilateral creditors was sealed, the government was to hold another round of talks starting this week with private creditors and international sovereign bondholders for restructuring. As of March 2024, the outstanding balance of commercial loans amounted to US$14,735.9 million.
Earlier this week, posters reading "good news" appeared on city walls, appearing to be part of the political campaign about the success of the debt restructuring effort that took so long to achieve. In mid-April In 2022, Sri Lanka declared its first sovereign default since gaining independence from Britain in 1948.
The International Monetary Fund had conditioned the restructuring of the external debt to the rescue of 2.9 billion dollars, the third tranche of which was released last week.
Wickremesinghe oversaw the IMF program while implementing tough economic reforms prescribed by the global lender. On Sunday he made his first public statement on the presidential elections, which are likely to take place in the last quarter of this year.
Addressing a group of young people, he said elections could take place in September or October.
Wickremesinghe has not yet announced his candidacy, while two other main opposition leaders have already declared themselves in the race. In July 2022, Wickremesinghe was elected by parliament to become caretaker president for the remaining term of Gotabaya Rajapaksa, who He resigned after public protests over his inability to handle the economic crisis.
