The International Monetary Fund (IMF) announced that it welcomes Sri Lanka’s finalization of debt restructuring agreements with major creditor nations, marking a significant step towards restoring debt sustainability. According to IMF’s Senior Mission Chief in Sri Lanka, Peter Breuer, the agreements reached with China and other creditor nations to restructure approximately $10 billion in bilateral debt represent a key milestone in the country’s debt restructuring process.
The IMF expressed hope for swift progress in reaching agreements with external private creditors, as Sri Lanka still needs to restructure about $12.5 billion in international bonds. On June 26, deals were signed with China and other creditor nations after negotiations with the Official Creditor Committee (OCC) and China Exim Bank, marking crucial progress towards stabilizing Sri Lanka’s financial situation.
The debt restructuring process began in September 2022 when Sri Lanka’s reserves hit a record low, leading to a default on foreign debt. The restructuring of bilateral debt agreements was a primary condition set by the IMF under a $2.9 billion bailout program, which has helped Sri Lanka reduce inflation, stabilize its currency, and improve state finances.