In a significant boost to Sri Lanka’s ongoing debt restructuring efforts, the government has signed bilateral amendatory loan agreements with the Saudi Fund for Development (SFD) to restructure a total of SAR 516.95 million (approximately USD 138 million). This agreement, signed in Colombo on Monday, comes at a time when the crisis-hit island nation is grappling with one of its worst economic downturns in decades.
The Finance Ministry noted that the Kingdom of Saudi Arabia has played a vital role in supporting Sri Lanka, even during its most difficult phase when it declared a debt standstill in 2022. Despite the financial uncertainty and global hesitancy, the SFD continued its loan disbursements, enabling the uninterrupted implementation of several development projects across the country.
“This assistance enabled us to make significant progress on vital development projects without hindrance,” the Finance Ministry said in a statement, acknowledging that the loans were extended on concessionary terms, offering much-needed relief to the country’s overall debt burden.
Sri Lanka’s Treasury Secretary Harshana Suriyapperuma signed the agreements on behalf of the government, while Sultan Abdulrahman A. Almarshad, CEO of the Saudi Fund for Development, represented the Kingdom. The agreement is part of Sri Lanka’s broader external debt restructuring program, which is a key component of its economic recovery strategy under the guidance of the International Monetary Fund (IMF).
This latest development marks Saudi Arabia’s deeper involvement in Sri Lanka’s financial recovery. According to official data, the total exposure of the SFD to Sri Lanka before restructuring stood at over SAR 517 million, primarily in the form of concessionary loans for infrastructure and development projects in energy, education, and health sectors.
The restructuring of this debt is expected to strengthen Sri Lanka’s negotiations with other bilateral creditors and commercial lenders. Analysts say such agreements serve as confidence boosters for international markets and institutions, enhancing the credibility of Sri Lanka’s restructuring process and creating fiscal space for critical public investments.
“The conclusion of these loan restructuring agreements will further deepen the longstanding bilateral relations between Saudi Arabia and Sri Lanka,” the ministry added, expressing optimism about future cooperation in trade, investment, and development finance.
As Sri Lanka strives to finalize its debt treatment plans with other official creditors under the Common Framework and secure sustainability in public finance, the support from nations like Saudi Arabia provides much-needed momentum. The agreement reflects not only financial relief but also growing geopolitical goodwill towards the island nation’s path to recovery.
