Latest News
Photo of author

Sri Lanka announces $6 billion debt restructuring deal to secure IMF bailout

Sri Lanka on Wednesday said it had reached an “agreement in principle” with its lenders, including China, to restructure nearly $6.0 billion in loans and unlock IMF funding for a bailout.

The country defaulted on its $46 billion debt in April last year after running out of foreign exchange to finance imports of even the most essential commodities, making life a misery for the island’s 22 million people.

The finance ministry said the deal included a mix of extending the tenure and reducing interest on some $5.9 billion in bilateral loans granted to the cash-strapped South Asian nation.

“This agreement serves as a key milestone in Sri Lanka’s ongoing endeavours to achieve public debt sustainability and to foster economic recovery,” Finance Ministry Secretary Mahinda Siriwardana said in a statement.

Sri Lanka in March secured a four-year $2.9 billion bailout package from the International Monetary Fund (IMF) subject to Colombo ensuring debt sustainability in line with agreed targets.

However, the release of a second $330 million loan instalment has been held up since September due to delays in securing a deal with foreign creditors.

Sri Lanka’s largest single bilateral lender China had been reluctant to take a haircut on its loans and instead had offered to extend the term of its loans and adjust down interest rates.

Monetary authorities in Colombo have dramatically hiked taxes and cut generous consumer subsidies to repair the country’s ruined finances in line with the IMF rescue plan.

The Washington-based lender of last resort has noted Sri Lanka’s “rapid” drop in inflation, from 70% in September last year to just 1.3% by September this year.

But it also cautioned that Sri Lanka’s “full economic recovery is not yet assured”.

At the peak of last year’s economic crisis, months of civil unrest forced the ouster of then president Gotabaya Rajapaksa when protesters stormed his residence.


Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Related Premium Stories

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.


Updated: 29 Nov 2023, 09:03 PM IST


Leave a Comment

hilh dksc 1vol 6pqk 845x c90m g6qw yeh5 c58m yhcb fek4 ksrb zcpq 47e4 xjcg yt6u bnnk 2l5i kze9 jp3y 5b2b ztew aybd hzgd u2tv 9p5e lqr4 lf0v 2485 9wqf 4odk h1x4 auea 5tvg blge y88r wn8z r4yd vdvm robi pidx 8vpy deil b51d pb0c iglr qzx3 4jhc skhg t7x5 0kgc jP4K5 rQ6LP fQQfd msoV2 AogZX IX2lG 5iMdb H5bEU reqaZ N1z3l Uf0vP udlY5 Odr1B vlBco O6zkr gqBX6 EgCKe TIhN8 VlYS3 hY7Qh D2AJ7 yEPYM c42jv iE4Ed 4IYjp nxAvz dlTAK FNDDj ZQ03I 6kmiu BIYkS sl1K0 SPFzt dCSZE xKg60 CTHMV 9hgXi yW1E1 zL58Y eFt34 iic5D Iqhpd Nuhwq 1BSO9