Sri Lanka has been informed that a debt-restructuring agreement with creditor nations has been reached, it was reported.
According to Reuters, a government source said, however, Sri Lanka is yet to receive a letter of confirmation from the official creditor committee.
“Sri Lanka has been informed of an agreement. It is confirmed that an agreement has been reached with bilateral lenders but we are still waiting on an official letter. We expect it soon,” the source, who did not want to be identified, said.
Japan co-chairs the official creditor committee, together with France and India. China is Sri Lanka’s largest bilateral creditor and is an observer in the group, steering clear of joining the group as a formal member.
Sri Lanka, mired in its worst financial crisis in decades, has been trying to reach restructuring deals with creditors since last year, having been forced to default on its foreign debt in May 2022 after its foreign exchange dwindled to record lows.
The agreement with the group of creditor nations comes about a month after the heavily indebted island nation reached a deal with the Export-Import Bank of China (EXIM) covering about $4.2 billion of outstanding debt.
The EXIM deal will help Sri Lanka clear the first review of an International Monetary Fund (MF) bailout, and secure a second IMF tranche of about $334 million, the country’s finance ministry had said.
Sri Lanka’s total external debt is estimated at $36.6 billion, which includes $10.94 billion of bilateral debt, according to the latest data released by its finance ministry.
The country also needs to reach an agreement with bondholders who hold the bulk of the island’s $12.5 billion worth of international sovereign bonds. (NewsWire)
