Sri Lanka committed to repaying debt within 2027-2042 schedule
President Ranil Wickremesinghe declared on Wednesday that Sri Lanka remains steadfast in its commitment to repaying its debt within the designated 2027-2042 schedule. He emphasized that successful debt restructuring negotiations are anticipated to reduce annual external debt payments to 4% of the country's GDP.
Sri Lanka faced a significant setback in May 2022 when it defaulted on its foreign debt due to an unprecedented financial crisis triggered by a severe shortage of foreign exchange. To address the crisis, the country initiated negotiations with creditors following a 2.9 billion US dollar bailout from the International Monetary Fund (IMF) in September 2022. However, an agreement with private bondholders is yet to be reached.
While Sri Lanka successfully reached an agreement with bilateral creditors, including India, China, and Japan, in November of the previous year, the default status is expected to persist until 2027. President Wickremesinghe informed parliament that this timeline allows the nation to rebuild its economy and eventually re-enter international financial markets to secure funds for resuming debt repayments.
Highlighting positive economic developments, President Wickremesinghe noted that Sri Lanka's economy began its revival in the third quarter of 2023. International financial institutions have projected a potential economic growth ranging from 2% to 3% for the year 2024, as stated before lawmakers.
Moreover, Sri Lanka's foreign reserves, which plummeted to less than $20 million in April 2022 during the peak of the financial crisis, have undergone significant recovery, now exceeding 3 billion dollar, according to President Wickremesinghe's announcement.
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