June 27, Colombo (LNW): India has expressed its approval of Sri Lanka’s debt restructuring agreement with a coalition of creditor nations and reaffirmed its commitment to supporting the island nation’s economic recovery through long-term investments, the Press Trust of India (PTI) reported.
As a co-chair of the Official Creditors Committee (OCC), established in April last year to devise a debt restructuring plan for Sri Lanka, India played a crucial role in finalising the agreement.
The Sri Lankan government announced it had secured a long-awaited debt restructuring deal worth USD 5.8 billion with its bilateral lenders, including India and China.
India’s Ministry of External Affairs (MEA) stated that after multiple rounds of negotiations, the OCC signed a Memorandum of Understanding (MoU) on debt restructuring on June 26.
The MEA highlighted that this significant achievement underscores Sri Lanka’s progress in stabilising its economy and advancing towards reform and growth.
“As a co-chair of the OCC, alongside France and Japan, India has remained steadfast in its commitment to the stabilisation, recovery, and growth of the Sri Lankan economy,” the MEA said.
“This commitment was further demonstrated by India’s unprecedented financial support of USD 4 billion to Sri Lanka. India was also the first creditor nation to provide financing assurances to the International Monetary Fund (IMF), which facilitated Sri Lanka’s access to the IMF programme.”
The MEA reiterated India’s dedication to supporting Sri Lanka’s economic recovery, including through the promotion of long-term investments in key economic sectors.
Following the IMF’s approval of the Extended Fund Facility (EFF) programme for Sri Lanka on March 20 last year, the OCC was formed to engage Sri Lanka’s bilateral creditors in discussions to finalise a debt restructuring plan.
Sri Lanka faced a severe economic crisis in 2022, with a decline in foreign exchange reserves leading to a default on foreign debt. India and several other nations extended assistance to help Sri Lanka navigate the crisis.
