Sri Lanka’s Debt Restructuring gains momentum

• 5opn1
• December 4, 2024
• Business News
• Sri Lanka’s Debt Restructuring gains momentum
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Sri Lanka’s efforts to address its debt crisis have gained significant momentum as bondholders representing the country’s US $12.55 billion in International Sovereign Bonds (ISBs) have committed to debt restructuring.

This process aims at offering the government substantial relief, with both foreign and local bondholders signaling readiness for participation.

The Ad Hoc Group of Sri Lanka Bondholders, holding 40 per cent of ISBs, and the Local Consortium of Sri Lanka-LCSL, composed of local banks and financial institutions have both expressed full support for the debt exchange proposal launched by the government.

The initiative includes macro-linked bonds that adjust in line with GDP growth. Central Bank Governor Nandalal Weerasinghe reassured stakeholders of the plan’s sustainability, rejecting claims that repayment challenges would arise in 2028.

He noted that only 4.5 per cent of GDP is allocated annually for foreign debt payments, with major repayments deferred to between 2032 and 2040.