Colombo: Sri Lanka has reached a pivotal debt-restructuring agreement with its sovereign bondholders, marking a significant step toward economic stabilisation.
As per reports, the deal, announced by the Ministry of Finance on Friday, follows consultations with the International Monetary Fund (IMF) and the country's Official Creditor Committee (OCC), ensuring compliance with the IMF-supported recovery program.
Reportedly, the agreement, reached in principle on September 19, comes after the recent presidential elections, which saw Anura Kumara Dissanayake of the National People’s Power (NPP) party take office. His administration has endorsed the debt restructuring plan, prioritising the swift restructuring of International Sovereign Bonds (ISBs).
The IMF's USD 2.9 billion Extended Fund Facility (EFF), crucial to Sri Lanka's recovery, hinges on external debt restructuring. So far, Sri Lanka has received three tranches of approximately USD 360 million each under the program. The government is now pushing for the release of the fourth tranche.
Sri Lanka’s economic recovery remains a priority for the new government, though President Dissanayake has called for easing some IMF conditions to provide relief to the public. Despite this, the administration has reaffirmed its commitment to the IMF-backed reforms.
This agreement follows the country’s declaration of a historic sovereign default in April 2022, after a financial crisis led to civil unrest and the resignation of then-President Gotabaya Rajapaksa.
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