Sri Lanka’s President Ranil Wickremesinghe announced a critical debt restructuring agreement with India, France, Japan, and China, marking a significant step in the country's economic recovery following its 2022 debt default. The deal, part of an International Monetary Fund (IMF) bailout program, is expected to revive bilateral transactions and resume foreign-funded projects that were halted during the financial crisis.
Sri Lanka declared bankruptcy in April 2022, suspending repayments on approximately $83 billion in loans amid a severe foreign exchange crisis. This led to acute shortages of essentials and widespread power cuts. The economic turmoil was largely due to poor economic management, compounded by the impacts of the COVID-19 pandemic and the 2019 terrorist attacks, which devastated the crucial tourism sector.
With the new agreements, Sri Lanka will defer all bilateral loan installment payments until 2028 and repay the loans on concessional terms, extending the repayment period until 2043. The restructuring covers $10 billion in debt, aiming to maintain debt payments at less than 4.5 percent of GDP between 2027 and 2032.
President Wickremesinghe highlighted that the agreements would enable the resumption of foreign-funded projects like highways, light railways, and airport developments, which were stalled post-bankruptcy. This development is expected to revitalize Sri Lanka’s infrastructure and economy, providing a much-needed boost to the nation's recovery efforts.
Sri Lanka declared bankruptcy in April 2022, suspending repayments on approximately $83 billion in loans amid a severe foreign exchange crisis. This led to acute shortages of essentials and widespread power cuts. The economic turmoil was largely due to poor economic management, compounded by the impacts of the COVID-19 pandemic and the 2019 terrorist attacks, which devastated the crucial tourism sector.
With the new agreements, Sri Lanka will defer all bilateral loan installment payments until 2028 and repay the loans on concessional terms, extending the repayment period until 2043. The restructuring covers $10 billion in debt, aiming to maintain debt payments at less than 4.5 percent of GDP between 2027 and 2032.
President Wickremesinghe highlighted that the agreements would enable the resumption of foreign-funded projects like highways, light railways, and airport developments, which were stalled post-bankruptcy. This development is expected to revitalize Sri Lanka’s infrastructure and economy, providing a much-needed boost to the nation's recovery efforts.
