Sri Lanka announced on Wednesday that it has reached a crucial agreement to restructure $5.9 billion in public debt, a step that is pivotal for the country to access a second installment of $334 million from the International Monetary Fund (IMF). This progress is part of a larger $2.9 billion bailout package from the IMF, aimed at stabilizing the nation's economy.
The announcement made by the Finance Ministry involves an Official Credit Committee that includes representatives from India and Japan, signaling a collaborative effort to address Sri Lanka's financial crisis. The restructuring plan is a significant milestone following the country's bankruptcy declaration in April 2022, when it reported over $83 billion in debt. The economic turmoil led to severe shortages of essentials, triggering widespread public unrest and the eventual resignation of then-President Rajapaksa.
As Sri Lanka navigates through these challenging times, the memorandum being formalized will lay out the terms for debt treatment. These terms are not only critical for economic recovery but also align with the IMF's recommendations, which include reforms in tax administration. The agreement with the Official Credit Committee marks a positive step toward fulfilling the conditions set by the IMF, which are necessary for the continued support and recovery of the island nation's economy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.