Sri Lanka reaches deal on debt restructuring with bilateral creditors including China and France

Supporters of Sri Lanka's President Ranil Wickremesinghe watch a televised speech in Colombo, Sri Lanka, Wednesday, June 26, 2023. President Ranil Wickremesinghe in a televised address to the nation announced that the country had reached agreements with bilateral creditors including Japan, India, France and China, a key step in the island nation's economic recovery since defaulting on its debt repayment in 2022.

Additionally, the then-government slashed taxes in 2019, depleting the treasury just as the virus hit. Foreign exchange reserves plummeted, leaving Sri Lanka unable to pay for imports or defend its beleaguered currency, the rupee. By 2022, Sri Lanka had to repay about $6 billion in foreign debt every year, amounting to about 9.2% of gross domestic product. The agreement would enable Sri Lanka to maintain debt payments at less than 4.5% of GDP between 2027 and 2032.

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