Sri Lanka's Debt Overhaul Gains International Support

Sri Lanka's $12.5 billion bondholder debt restructuring has been backed by the IMF and bilateral creditors, including India, China, and Japan. This support provides a significant boost to the country's fragile economy following its first foreign debt default in May 2022.

Sri Lanka's government announced on Friday that it has secured backing from the International Monetary Fund (IMF) and key bilateral creditors for its $12.5 billion bondholder debt restructuring plan. This approval marks a pivotal step towards stabilizing the nation's struggling economy.

The South Asian country had defaulted on its foreign debt for the first time in May 2022, amid a severe financial crisis exacerbated by a heavy debt load and decreasing foreign exchange reserves. Last month, Sri Lanka entered a preliminary agreement with its creditors to restructure its international bonds, a move now formally endorsed by significant financial institutions and creditor nations.

In a statement issued by the finance ministry, it was confirmed that the Official Creditors Committee verified the compliance of the Agreement in Principle with the Comparability of Treatment principle. Support from major creditors such as India, China, and Japan further underscores the international backing for Sri Lanka's debt rework efforts.

(With inputs from agencies.)