December 27, Colombo (LNW): Amidst ongoing discussions about credit for the country’s debt restructuring efforts, Labour Minister Prof. Anil Jayantha Fernando addressed the issue at a press conference yesterday (26), offering a detailed explanation of the government’s involvement in the process.
The fundamental agreements for restructuring 99 per cent of Sri Lanka’s external debts were already in place during the previous administration, and the current government’s role has been limited to restructuring just one percent, which amounts to approximately US$ 300 million, according to Fernando.
Speaking at the President’s Media Centre, Fernando elaborated on the debt restructuring negotiations, highlighting that the current government focused solely on debts owed to other official creditors, such as Kuwait, Saudi Arabia, Iran, and Pakistan.
He made it clear that these amounted to a relatively small portion of the total external debt burden.
“The restructuring of bilateral debt is managed by the Official Creditor Committee (OCC), which is co-chaired by France, India, and Japan. This committee represents 17 countries, including China Exim Bank and China Development Bank, as well as other official creditors and commercial lenders. By June 2024, the OCC had reached agreements on the terms and conditions for restructuring, and loans from China Exim Bank were already restructured by October 2023, following the agreed framework, ensuring comparable treatment across all creditors,” the Minister explained.
On the topic of International Sovereign Bonds (ISB), Fernando clarified that the previous government had made an agreement in principle to restructure these bonds on September 19, 2024, just days before the Presidential election.
The current administration continued the process and successfully concluded the restructuring on December 20, 2024.
“ISBs, which total US$ 14.2 billion, including overdue interest of US$ 1.7 billion, were restructured with the cooperation of the Ad Hoc Group (AHG) and a local banking consortium. The government’s swift and decisive actions have been crucial in stabilising the economy, and this has been recognised by external rating agencies, which have upgraded Sri Lanka’s credit ratings. This success was only possible through the government’s strategic focus and timely implementation of stabilisation measures,” he added.
Fernando further remarked that while there had been significant debate about the notion of a country’s bankruptcy, the economic crisis was, in fact, a consequence of policies adopted by previous governments.
He pointed to the unilateral suspension of external debt payments in April 2022 as the key moment that led to the country’s financial turmoil.
“The current government has worked hard to lay the foundations for financial stability, and we are confident that by the end of 2025, we will see positive changes both in the economy and in the lives of the people,” Fernando emphaised.
He assured that the government is fully committed to guiding the nation towards a path of growth and prosperity, despite the challenges it faces.
