Govt. restructured only 1 % external debts: Minister

By Ajith Siriwardana  

Amidst debates on claiming credit for debt restructuring, Minister of Labour Prof. Anil Jayantha said yesterday that fundamental agreements on restructuring 99 percent of the total external debts had been reached during the previous government and the current government intervened to restructure only one percent, USD 300 million external debts. 

The Minister told a press briefing at the President’s Media Centre (PMC) that the current government only restructured debts of other official creditors - Kuwait, Saudi Arabia, Iran and Pakistan - accounting to USD 300 million which is about 1% total external debts.   

“The bilateral debt is dealt with the Official Creditor Committee (OCC) co-chaired by France, India and Japan representing 17 countries, China Exim Bank, China Development Bank, other official creditors (Kuwait, Saudi Arabia, Iran and Pakistan) and other commercial creditors. OCC had agreed to the terms and conditions in June 2024 and the loans with China Exim Bank had already been restructured in October 2023 within the agreed framework, ensuring comparability of treatment (CoT),” he said.   

Commenting on the ISB restructuring, he said the previous government had agreed in principle (AlP) on September 19, 2024 just two days prior to the Presidential election on restructuring ISBs and that the present government continued with the restructuring process and successfully completed the ISB restructuring on December 20, 2024.   

“Ad Hoc Group (AHG) and Local banking consortium represent ISBs which account for USD 14.2 billion including a past due interest of USD 1.7 billion. By prioritizing and facilitating actions in a timely manner, the new government has demonstrated a strong political commitment to steering the country toward economic stability. These efforts toward financial stability have been independently acknowledged by third parties, including rating agencies which have upgraded the ratings by several notches, which was only possible due to the correct prioritization and implementation of economic stabilization measures.   

Therefore, the government continued with the restructuring process and facilitated it to ensure the successful completion of the issuance of new bonds for the exchange of existing ones on 20th December 2024 in order to achieve the critical objective of stabilizing the economy in pursue of navigating the country with the growth and development trajectory towards a thriving nation and beautiful life,” he said.   

Responding to a question, he said there was a huge debate on the bankruptcy of a country and that an economic crisis had been created intentionally due to economic policies adopted by previous governments while unilaterally suspending external debt servicing in April 2022, which was called bankruptcy of the country.   
He said the government was able to lay the basic foundation to create financial stability and that the government has taken the steering wheel to steer the country towards the intended direction.   
“We will see the results of financial stability by the end of 2025 where changes will be seen in people’s lives and economic indicators as well,” he said.