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

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Sri Lanka's President Ranil Wickremesinghe announced a debt restructuring deal with its various creditors Wednesday, marking progress in its economic recovery.

Sri Lanka's President Ranil Wickremesinghe announced a debt restructuring deal with countries including India, France, Japan and China in a televised address to the nation Wednesday. The agreement marks a key step in the country's economic recovery after defaulting on debt repayment in 2022.announced a debt restructuring deal with countries including India, France, Japan and China in a televised address to the nation Wednesday.

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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