Sri Lanka Secures Debt Restructuring Deal in Crucial Economic Revival

Sri Lanka has struck a debt restructuring agreement with international sovereign bondholders, marking a crucial step toward debt sustainability. This follows the country’s first sovereign default in April 2022. Officials stated the deal includes a 28% haircut and initial payments set for September 2023, aiding the IMF bailout.

Sri Lanka has reached a breakthrough agreement with international sovereign bondholders on debt restructuring, described by State Finance Minister Shehan Semasingher as a ''crucial step'' towards achieving debt sustainability.

The restructuring deal, completed on Wednesday, is pivotal in addressing Sri Lanka's financial woes, highlighted by its USD 12.5 billion in ISB (International Sovereign Bonds). This agreement awaits approval from the official creditor committee, which includes several nations, such as India.

Officials disclosed that the agreement includes a 28% haircut, with upfront payments to ISB holders starting from September. This marks the end of Sri Lanka's comprehensive debt restructuring process, a prerequisite for the USD 2.9 billion IMF bailout. This follows earlier agreements with bilateral lenders including India and China, finalized in June, which had been hailed as a ''significant milestone.''

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