REUTERS - Sri Lanka’s agreements with China and other creditor nations to restructure about US$10 billion in bilateral debt brought it a step closer towards restoring debt sustainability, the International Monetary Fund (IMF) said yesterday.

The island nation signed deals with China and other creditor nations to restructure about US$10 billion in bilateral debt on Wednesday, helping it approach the end of a restructuring process that began in September 2022 after its reserves hit record lows and forced it to default on foreign debt for the first time.

Sri Lankan officials in Paris inked the agreement with the Official Creditor Committee (OCC) co-chaired by Japan, India and France that have lent a combined US$ 5.8 billion.

The committee is now awaiting details of a separate agreement that was signed with China EXIM Bank to rework US$ 4.2 billion to be shared with them to ensure comparability of treatment, OCC said in a statement.

Sri Lanka, however, still needs to convince bondholders to restructure about US$12.5 billion in international bonds.

“We hope that there will be swift progress on reaching agreements with external private creditors in the near future,” Peter Breuer, IMF’s senior mission chief for Sri Lanka, said in a statement.

Bilateral lenders said they hoped an agreement with bondholders would be “on terms at least as favourable as the terms offered by the OCC.”