Sri Lanka President's Special Statement: Key Points | Bilateral Debt Payments Deferred, Projects Restarted

COLOMBO (News 1st); Sri Lankan President Ranil Wickremesinghe announced that debt restructuring agreements will postpone all bilateral loan payments to foreign countries until 2028. 

Additionally, Sri Lanka will have until 2043 to repay these loans on concessional terms.

In a special statement, President Wickremesinghe  announced that debt restructuring agreements were finalized with Sri Lanka's official creditors in Paris & with Chinese Exim Bank in Beijing. 

On June 26, 2024, Sri Lanka concluded negotiations with the Official Creditor Committee (OCC) and China Exim Bank, marking pivotal strides towards stabilizing its financial footing amid recent economic challenges.

The agreements, valued at a combined USD 10 billion, encompass restructuring arrangements with major bilateral lenders under the auspices of the OCC, co-chaired by Japan, India, and France. Notable members of the committee include Australia, Austria, Belgium, Canada, Denmark, Germany, Hungary, Korea, the Netherlands, Russia, Spain, Sweden, the United Kingdom, and the United States of America.

Here are the key points from the special statement delivered by the President:

1. Debt Restructuring Milestone: Sri Lanka reached final agreements with official bilateral creditors in Paris and with China’s Exim Bank in Beijing, marking significant progress in economic stabilization and reform efforts.
  
2. Economic Impact: The agreements allow Sri Lanka to defer bilateral loan payments until 2028 and repay loans on concessional terms until 2043, reducing the government's annual gross fiscal requirement significantly.

3. Revival of Development Projects: The debt restructuring agreements open the way for resuming halted development projects funded by foreign loans, such as the Katunayake Airport development and the light railway.

4. International Confidence: The agreements with bilateral creditors restore international confidence in Sri Lanka, enhancing the country's credibility and facilitating financial transactions and investments.

5. Economic Improvements: Significant economic improvements include the growth of the economy, increased foreign reserves, reduced inflation, and a surplus in both the primary account balance and the current account balance.

6. Path to Economic Independence: The President emphasized a four-step plan to transform Sri Lanka into a developed nation by 2048, focusing on fiscal discipline, debt stabilization, attracting foreign investment, and promoting a digital green economy.

A. Securing extended credit facilities in consultation with the International Monetary Fund and instituting fiscal discipline nationwide.

B. Collaborating with international financial and legal experts from Lazard and Clifford Chance to formulate a debt stabilization plan and negotiate agreements with creditors.

C. Implementing policies, regulations, and initiatives to attract foreign investment, bolster the export economy, and promote a digital green economy.

D. Aiming to transform into a developed nation with a debt-free advanced economy by 2048 through this comprehensive program.