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Sri Lanka Repays USD 1.9 Billion in Foreign Debt Amid Ongoing Financial Reforms

April 06, Colombo (LNW): In a significant update on Sri Lanka’s debt repayment efforts, Mr. Rajith Keerthy Tennakoon, President Director General of Community Affairs, announced that the government has settled a total of USD 1909.7 million in foreign debt and interest payments between President Ranil Wickremesinghe’s assumption of office and February 2024.

According to Mr. Tennakoon, from July 21, 2022, to February 2024, the government disbursed USD 1338.8 million in multilateral loans and interest, with no outstanding arrears in loan instalments or interest payments up to February 2024.

Highlighting the breakdown of payments, Mr. Tennakoon stated that significant amounts were paid to institutions such as the Asian Development Bank (USD 760.1 million), the International Monetary Fund (USD 9.8 million), and the World Bank (USD 489.9 million), among others.

The positive track record in debt repayment has enabled Sri Lanka to negotiate further financial support from institutions like the ADB, IMF, and World Bank. Bilateral loan agreements with various countries and financial institutions have also contributed to strengthening the country’s financial position.

Despite these achievements, discussions are ongoing with relevant states and institutions to finalize agreements on the repayment of bilateral loans and interest amounting to USD 571.0 million. Preliminary agreements have been reached with members of the Paris Club, with outstanding interest to be settled by the end of February 2024, totaling USD 450.7 million.

Additionally, efforts are underway to restructure business loans and interest totaling USD 4,439.2 million to alleviate the burden of high-interest rates. However, the reinstatement of the special interest rate for fixed deposits of senior citizens, initially introduced in 2015, faces challenges due to the country’s economic crisis.

Mr. Tennakoon emphasized the need for sustainable financial management practices to prevent future crises and ensure economic stability. He highlighted the importance of addressing the necessary funding for reinstating the special interest rate for senior citizens and upholding prudent financial policies to foster economic growth.

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