Sri Lanka says debt restructure finalised by April

Sri Lanka’s bankrupt government said that a foreign debt restructure would be finalised by the beginning of April, after signs the economy was emerging from its worst crisis on record.

Sri Lanka's bankrupt government said Friday that a foreign debt restructure would be finalised by the beginning of April, after signs the economy was emerging from its worst crisis on record.

The island nation defaulted on its $46 billion foreign debt in 2022 after a foreign exchange wipeout left it unable to import food, fuel and other essentials.

It secured a $2.9 billion International Monetary Fund (IMF) bailout last year which is conditional on a debt deal that satisfies foreign creditors.

"The target for the completion of the debt restructuring would be within the first quarter of the year," President Ranil Wickremesinghe's office said.

The IMF released a $337-million second tranche of its four-year loan last month after Colombo secured an "in principle" debt agreement with China, Sri Lanka's biggest bilateral lender.

Neither Colombo nor Beijing have disclosed details of the offer, but the IMF said it was sufficient to ensure the island's debt sustainability.

Official sources in Sri Lanka said the Chinese deal included a mix of extending the tenure and reducing interest on bilateral loans, instead of a haircut on its loans.