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Sri Lanka Strikes Debt Restructuring Deal with Creditors, Paving Way for IMF Bailout Review

The agreement, covering approximately $5.9 billion of debt, could trigger a second tranche of about $334 million in IMF funds.

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Overview

  • Sri Lanka has reached an in-principle agreement with creditor nations to restructure its debt, preparing the way for the IMF to consider clearing the first review of a bailout next month.
  • The deal comes about a month after Sri Lanka's deal with the Export-Import Bank of China covering about $4.2 billion of outstanding debt.
  • Clearing the IMF review could trigger a second tranche of about $334 million in funds.
  • The agreement with the Official Credit Committee covers approximately $5.9 billion of outstanding public debt and consists of a mix of long-term maturity extension and reduction in interest rates.
  • Sri Lanka declared bankruptcy in April 2022 with more than $83 billion in debt — more than half of it to foreign creditors.