Sri Lanka Strategizes Debt Restructuring Amid Political Transition

Sri Lanka prioritizes its debt restructuring process following External Affairs Minister S. Jaishankar's visit. The country seeks support from India under the comparative treatment principle for debt resolution. As the IMF makes restructuring obligatory for bailouts, political changes raise questions on ongoing investments and projects like Adani's.

Sri Lanka's government has marked External Affairs Minister S. Jaishankar's visit as crucial for progressing with its debt restructuring talks with international bondholders. This visit symbolized global engagement as Anura Kumara Dissanayake assumed the presidency.

Cabinet spokesman Vijitha Herath announced that India's endorsement of the restructuring plan aligns with the comparative treatment principle. Sri Lanka, having declared its first sovereign default in April 2022, reached a preliminary agreement for restructuring USD 17.5 billion in debts in a bid to secure further financing.

Political shifts, including a pending general election, complicate the future of investments like the Adani wind power project. While the IMF continues to condition its bailout package on successful restructuring, Sri Lanka faces internal debates over the economic impact of foreign-funded projects.

(With inputs from agencies.)