Colombo: Sri Lanka on Wednesday said it has reached an agreement in principle with a group of creditors including India and Japan on debt restructuring, leading to unlocking the second tranche of a US$2.9 billion bailout package from the International Monetary Fund. This is an important step towards.
The agreement with the Official Credit Committee covers approximately US$5.9 billion of outstanding public debt and includes a mix of long-term debt. maturity extension and cutting interest rates, a statement from the country’s finance ministry said.
It also said the agreement will facilitate expedited approval by the IMF Executive Board for the review of Sri Lanka’s IMF-supported programme, thereby disbursing the next tranche of IMF financing amounting to approximately US$334 million. The IMF said in September that Sri Lanka’s economy was recovering, but it needed to reform its tax administration, eliminate exemptions and take tougher action. tax evasion,
Sri Lanka declared bankruptcy in April 2022 with debts of more than US$83 billion – more than half of it owed to foreign lenders.
Its economy was in crisis with severe shortages of food, fuel and other necessities. Due to strong public opposition, the then President Gotabaya Rajapaksa had to be ousted from power. The IMF agreed to a US$2.9 billion bailout package in March, with the first payments issued soon after.
To receive the second bailout tranche, Sri Lanka needed financial assurances from its bilateral creditors.
The ministry said the terms of the debt treatment will be further detailed and formalized in a memorandum of understanding between Sri Lanka and the Credit Committee, which is co-chaired by India, Japan and France and comprises 17 countries. “This will be implemented through bilateral agreements with each OCC member in accordance with their laws and regulations,” it said.
The agreement with the Official Credit Committee covers approximately US$5.9 billion of outstanding public debt and includes a mix of long-term debt. maturity extension and cutting interest rates, a statement from the country’s finance ministry said.
It also said the agreement will facilitate expedited approval by the IMF Executive Board for the review of Sri Lanka’s IMF-supported programme, thereby disbursing the next tranche of IMF financing amounting to approximately US$334 million. The IMF said in September that Sri Lanka’s economy was recovering, but it needed to reform its tax administration, eliminate exemptions and take tougher action. tax evasion,
Sri Lanka declared bankruptcy in April 2022 with debts of more than US$83 billion – more than half of it owed to foreign lenders.
Its economy was in crisis with severe shortages of food, fuel and other necessities. Due to strong public opposition, the then President Gotabaya Rajapaksa had to be ousted from power. The IMF agreed to a US$2.9 billion bailout package in March, with the first payments issued soon after.
To receive the second bailout tranche, Sri Lanka needed financial assurances from its bilateral creditors.
The ministry said the terms of the debt treatment will be further detailed and formalized in a memorandum of understanding between Sri Lanka and the Credit Committee, which is co-chaired by India, Japan and France and comprises 17 countries. “This will be implemented through bilateral agreements with each OCC member in accordance with their laws and regulations,” it said.
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