Sri Lanka is set to sign bilateral debt restructuring agreements with key creditors Japan and India on Wednesday. This announcement was made by Foreign Minister Ali Sabry on Tuesday during a phone call with Reuters.

President Updates Cabinet on Debt Progress

On Monday evening, Sri Lanka’s President Ranil Wickremesinghe provided a verbal update on the debt restructuring process to cabinet members. Sabry confirmed that the president mentioned the likely signing of the bilateral agreements on Wednesday. “The parameters of the debt restructuring were submitted to the cabinet earlier,” Sabry added.

Economic Crisis and Default

In May 2022, Sri Lanka defaulted on its foreign debt after a severe depletion of foreign exchange reserves pushed its economy to the brink. The country has been working towards economic recovery with the help of international support.

Provisional Agreement and IMF Support

In November, Sri Lanka reached a provisional agreement with the Official Creditor Committee (OCC), co-chaired by Japan, France, and India. This agreement was a crucial step in the nation’s economic recovery, supported by a $2.9 billion bailout package from the International Monetary Fund (IMF). Earlier this month, the IMF approved the second review of Sri Lanka’s bailout programme and urged for the swift finalisation of the Memorandum of Understanding (MoU) with the OCC, as well as final agreements with the Export-Import Bank of China.

Conclusion

The signing of these debt restructuring agreements marks a significant milestone in Sri Lanka’s journey towards economic stability. With the support of international creditors and the IMF, the country is making strides to overcome its financial challenges and rebuild its economy.

(With Inputs from Reuters)