Sri Lanka Finalizes $17.5 Billion Debt Restructuring Deal

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Sri Lanka Finalizes $17.5 Billion Debt Restructuring Deal

Team FS

19/Sep/2024

Sri Lanka restructures $17.5 billion in external debt, reducing interest payments significantly.

The deal includes a 40.3% Net Present Value concession, enhancing financial stability.

This marks a critical step in aligning with the IMF program and ending the moratorium on debt servicing.

Sri Lanka has successfully completed a pivotal debt restructuring deal, managing approximately USD 17.5 billion of its external debt. This agreement involves key creditors, including the China Development Bank and various international bondholders. The restructuring has achieved a 40.3% Net Present Value (NPV) concession, substantially lowering the country's interest payments and providing essential debt relief.

The negotiations included terms that could further adjust repayments based on Sri Lanka's performance regarding governance and anti-corruption targets. This restructuring is a significant milestone in alleviating Sri Lanka's economic pressures, expected to provide over USD 17 billion in debt service relief as part of an ongoing IMF program.

This successful negotiation signals the end of prolonged discussions and positions Sri Lanka towards a path of financial recovery. The deal allows the country to exit its temporary moratorium on foreign debt servicing, often referred to as a step towards emerging from bankruptcy. With this restructuring, Sri Lanka aims to stabilize its economy and implement essential reforms that can foster sustainable growth.

The implications of this deal are far-reaching, marking a critical moment in Sri Lanka’s journey towards economic stability and recovery. Stakeholders and investors will be closely monitoring the country's progress as it strives to meet the outlined governance benchmarks and navigates its financial landscape moving forward.

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Sri Lanka Finalizes $17.5 Billion Debt Restructuring Deal

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