The government in Colombo, Sri Lanka, said on Wednesday it had finalized a long-delayed $5.8 billion debt restructuring deal in Paris with its bilateral lenders, including India and China, to meet a key condition of an IMF bailout.
This was announced by President Ranil Wickremesinghe's office, which said the agreement provides significant debt relief, which will allow Sri Lanka to allocate funds to essential public services and secure concessional financing for its development needs.
"Sri Lanka has reached a final $5.8 billion restructuring agreement with the official committee of creditors of its bilateral lenders in Paris," the presidential office said in a statement.
The statement came ahead of a televised address to the nation this evening by President Wickremesinghe, who has led the effort to lift the island out of economic crisis since Sri Lanka declared its first sovereign default in 2022.
President Wickremesinghe, who also holds the finance minister portfolio, is expected to contest the presidential election in the coming months. It is understood that Wickremesinghe, 75, will "declare an end to bankruptcy" following the agreement reached with bilateral creditors and private bondholders on external debt restructuring.
State Finance Minister Shehan Semasinghe announced that Sri Lankan authorities are also in the process of signing bilateral debt treatment agreements 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 their unwavering support," he said.
He also commended the OCC Secretariat for its dedication to 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 consisted of the Paris Club of Nations (Japan, the United Kingdom and the United States), while the non-Paris Club nations were China, India and the rest.
Government officials said a special session of parliament will be called on July 2 ahead of its scheduled July 8 date to discuss the deal.
President Mahinda Yapa Abeywardena issued a special bulletin convening parliament on July 2 at the request of Prime Minister Dinesh Gunawardena.
Once the agreement with bilateral creditors was sealed, the government was going 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, banners 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 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 about 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 is yet to announce 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 interim president for the remaining term of Gotabaya Rajapaksa, who resigned following public protests over his inability to handle the economic crisis.
This was announced by President Ranil Wickremesinghe's office, which said the agreement provides significant debt relief, which will allow Sri Lanka to allocate funds to essential public services and secure concessional financing for its development needs.
"Sri Lanka has reached a final $5.8 billion restructuring agreement with the official committee of creditors of its bilateral lenders in Paris," the presidential office said in a statement.
The statement came ahead of a televised address to the nation this evening by President Wickremesinghe, who has led the effort to lift the island out of economic crisis since Sri Lanka declared its first sovereign default in 2022.
President Wickremesinghe, who also holds the finance minister portfolio, is expected to contest the presidential election in the coming months. It is understood that Wickremesinghe, 75, will "declare an end to bankruptcy" following the agreement reached with bilateral creditors and private bondholders on external debt restructuring.
State Finance Minister Shehan Semasinghe announced that Sri Lankan authorities are also in the process of signing bilateral debt treatment agreements 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 their unwavering support," he said.
He also commended the OCC Secretariat for its dedication to 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 consisted of the Paris Club of Nations (Japan, the United Kingdom and the United States), while the non-Paris Club nations were China, India and the rest.
Government officials said a special session of parliament will be called on July 2 ahead of its scheduled July 8 date to discuss the deal.
President Mahinda Yapa Abeywardena issued a special bulletin convening parliament on July 2 at the request of Prime Minister Dinesh Gunawardena.
Once the agreement with bilateral creditors was sealed, the government was going 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, banners 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 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 about 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 is yet to announce 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 interim president for the remaining term of Gotabaya Rajapaksa, who resigned following public protests over his inability to handle the economic crisis.
