Sri Lanka poised to secure grace period for repaying bilateral debts

*Earlier, President said Rs.17 billion reduction of total debt burden sought

*Details to be released to Parliament later

Colombo, June 26 (Daily Mirror) - Sri Lanka is likely to secure a grace period to settle its debts to bilateral creditors - India and China and the Paris Club of Nations - when signing the restructuring agreements with them today, an informed source said.

Sri Lanka held extensive talks with the Paris Club of Nations, India and China and reached agreements with them on equal terms to settle borrowings.

According to the government’s statistics, bilateral creditors account for 28.5 percent of outstanding foreign debt of $37 billion. China is the largest single bilateral creditor, accounting for $4.66 billion. Japan is second, with $2.35 billion, and India third with $1.36 billion.

Sri Lanka’s commercial borrowings include $12.55 billion raised through International Sovereign Bonds (ISB), and another $2.18 billion from the China Development Bank. Sri Lanka dealt with China separately in restructuring its debts. Today’s agreement will be signed with Chinese EXIM Bank. In the meantime, talks will continue with China Development Bank for restructuring commercial debts.

Earlier, President Ranil Wickremesinghe said that the government expected the deferment of payment of its debts to bilateral creditors till 2028, and to complete repayment after that over a period ending in 2042.

The President also said earlier that Sri Lanka expects a reduction of its overall burden by US $ 17 billion.

Sri Lanka is currently under a four-year Extended Fund Facility programme with the International Monetary Fund. The country is expected to get $2.9 billion to be disbursed in tranches after biannual reviews.

The IMF Executive Board completed the 2024 Article IV Consultation and Second Review under the 48-month Extended Fund Facility with Sri Lanka, providing the country with immediate access to about US $336 million as the next tranche to support its economic policies and reforms.

Cabinet spokesman Minister Bandula Gunawardane said yesterday that a Finance Ministry delegation was heading to France for signing the agreement.

“All the details will be submitted to Parliament later for transparency,” he said.