Sri Lanka reaches debt-restructuring agreement

Sri Lanka reaches debt restructuring agreement with bondholders, providing relief to the cash-strapped nation.

The Sri Lankan government has announced a long-delayed debt restructuring agreement with its sovereign bondholders, in a major relief to the cash-strapped island nation.

In a statement on Friday (October 4, 2024), the Ministry of Finance said it reached an agreement with representatives of its international and local holders of International Sovereign Bonds (ISB) on September 19, 2024.

Sri Lankan authorities have "completed their consultations with Sri Lanka's Official Creditor Committee (OCC) and the International Monetary Fund (IMF)," said the statement from the Treasury.

It added that the agreement is compatible with the comparative treatment principle.

The announcement came as the new National People’s Power (NPP) government led by President Anura Kumara Dissanayake expressed willingness to accept the agreement during the talks held with the visiting IMF delegation in Colombo on Thursday and Friday (October 3 and 4, 2024)

During the two days of talks, Mr. Dissanayake reiterated Sri Lanka’s position that some of the rigid IMF conditions must be watered down to grant relief to the public.

The IMF made external debt restructuring conditional to the $2.9 billion four-year facility clinched in March 2023 by the Ranil Wickremesinghe administration.