Sri Lanka Still Needs to Convince Bondholders to Restructure $12.5 Billion in International Bonds, Says IMF

The International Monetary Fund (IMF) has stated that Sri Lanka is making progress in restructuring its debt with China and other creditor nations, with agreements in place to restructure about $10 billion in bilateral debt. However, the island nation still needs to convince bondholders to restructure about $12.5 billion in international bonds.

The IMF’s senior mission chief for Sri Lanka, Peter Breuer, expressed hope for swift progress in reaching agreements with external private creditors in the near future. These developments come as Sri Lanka works to restore debt sustainability and stabilize its financial situation.

The agreements with China and other creditors bring Sri Lanka closer to finalizing a debt restructuring process that began in September 2022 after the country defaulted on its foreign debt for the first time. President Ranil Wickremesinghe announced that Sri Lanka will seek approval from its parliament on the deals on July 2.

These agreements are a key part of the conditions set by the IMF under a $2.9 billion bailout program signed in March 2023. The program has helped Sri Lanka tame inflation, stabilize its currency, and improve government finances. The country’s economy is expected to grow by 3% in 2024, following a 2.3% contraction last year.

As Sri Lanka continues its efforts to restructure its debt and strengthen its financial standing, the global community will be closely watching for further developments in the near future.