Govt. says 90% of external debt restructuring completed

THE Government has agreed on restructuring terms with more than 98% of its external creditors and has completed over 90% of its public external debt restructuring, according to a Treasury statement issued after an investment call hosted jointly by the Finance, Planning and Economic Development Ministry and the Central Bank of Sri Lanka (CBSL) on 31 July.

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Bilateral debt negotiations have concluded with the China EXIM Bank, Saudi Arabia, Japan, India, France, and Hungary, covering a significant portion of the $ 5.82 billion owed to the Official Creditor Committee of 17 countries. Talks with Kuwait for $ 95 million are ongoing. Other bilateral debt of around $ 200 million is close to finalisation.

On the commercial side, the Government restructured 98% of its $ 10.59 billion International Sovereign Bonds (ISBs) in December 2024. Implementation has also been completed for the $ 3.20 billion owed to China Development Bank. Remaining negotiations include two commercial banks and some holders of 2022 Bonds who did not participate in the exchange, representing less than $ 50 million in exposure. One bank has agreed to terms, and discussions with the other are near completion. Hamilton Reserve Bank (HRB), which claims to hold 25% of the 2022 Bonds, has filed legal action seeking full repayment.

Certain other bondholders have entered discussions to settle under the most-favoured-creditor terms of the 2024 exchange offer.

SriLankan Airlines' $ 175 million Government-guaranteed Bonds remain under negotiation. The Government said it is working to conclude all outstanding talks in the coming months in line with International Monetary Fund (IMF) debt sustainability targets and comparability of treatment principles.

The Finance Ministry established its Public Debt Management Office in December 2024 to oversee debt strategy.

The office is expected to be fully operational by January 2026 and will evaluate proactive liability management operations.

Commenting on the increasing likelihood of Macro-Linked Bonds (MLBS) being triggered and thus increasing debt payments, the Government noted that adjustments to the MLBs have been designed to align with Sri Lanka's macroeconomic performance.