Sri Lanka will sign agreements to restructure bilateral debt with India and Japan on Wednesday. Sri Lanka’s Foreign Minister, M.U.M. Ali Sabry, was quoted by agencies as saying that Sri Lanka President Ranil Wickremesinghe had given an update on the progress in the matter to all members of the Cabinet on Monday.

 

Meanwhile, last week, Cabinet spokesman Minister Bandula Gunawardana said that Sri Lanka is ready to sign agreements with the bilateral creditors, which would then pave the way for the resumption of loan-funded projects.

 

Sri Lanka has been negotiating with the Paris Club, India, and China to restructure debt after declaring sovereign default in 2022, with in-principle deals reached last year.
Notably, India’s assistance of over USD 4 billion helped Sri Lanka manage the peak of the economic crisis, during which a forex shortage coupled with a short supply of essentials brought the island to a grinding halt.

 

With financing assurances from India and later from other creditors, IMF financing was approved in March last year, which has seemingly put India’s southern neighbour on the path to recovery.

 

The provisions under the debt restructuring would include maturity extensions and a moratorium without any haircut while maintaining the ‘Net Present Value’ under a formula. Earlier in March this year, Sri Lanka President Ranil Wickremasinghe told the Parliament that the debt restructuring would likely include a moratorium until December 2027 and repayment until 2042.

 

Sri Lanka’s Information Office has added that President Wickremesinghe is due to make a special national address on Wednesday evening, which is likely to be on the debt restructuring.