Sri Lanka approves debt restructuring with creditors; to sign deal on Wednesday: Govt spokesman

Colombo: Cash-strapped Sri Lanka has approved the debt restructuring deal with its creditors while the negotiations with international sovereign bondholders are to be continued further, cabinet spokesperson and minister Bandula Gunawardena said on Tuesday.

Gunawardena also said that top treasury officials along with the minister of state for finance have been sent to Paris to sign the relevant agreements with the Official Creditors Committee which comprises two types of creditors called Paris Creditors and Non-Paris Creditors.

There are a group of 15 countries under the Paris Creditors group whereas seven countries, including India in the Non-Paris Creditors.

"Sri Lanka on Tuesday approved the debt restructuring deal with creditors committee while the negotiations with international sovereign bondholders are to be continued further," Gunawardena, the minister for Transport, Highways and Mass Media said.

"Sri Lanka faced its worst crisis since independence when we were no longer able to meet our debt repayments. The president had long and extensive talks with the Indian prime minister and finance minister, leaders of China and Japan and the Paris Club debtors,” Gunawardena added.

Officials said the agreements would involve restructuring over $10 billion of debt with the bilateral creditors, including China.

Gunawardena also said that the details of the approved debt restructuring deal would also be presented in Parliament by President Ranil Wickremesinghe and also make a national address on June 26 after the deal is signed.

The deal would be a major step in the island’s economic recovery process after Sri Lanka announced its first-ever sovereign default in 2022.

The deal was a condition for the $2.9 billion International Monetary Fund bailout as the global lender stressed the island’s debt sustainability.