By: Staff Writer
December 28, Colombo (LNW): Minister of Labour Prof. Anil Jayantha Fernando recently addressed claims surrounding the restructuring of Sri Lanka’s external debt, clarifying that the current government’s role was limited to restructuring just one percent of the total debt, amounting to USD 300 million.
According to the Minister, the majority of the debt restructuring agreements, covering 99 percent of the external debt, were already established during the previous administration.
At a press briefing held at the President’s Media Centre, Prof. Fernando explained that the restructuring involved only bilateral debts owed to official creditors like Kuwait, Saudi Arabia, Iran, and Pakistan.
This process was handled by the Official Creditor Committee (OCC), co-chaired by France, India, and Japan, which represents 17 countries and other official creditors. An agreement on the terms and conditions was reached in June 2024, and restructuring with China Exim Bank was already completed in October 2023.
On the subject of restructuring International Sovereign Bonds (ISBs), Prof. Fernando noted that the previous government had agreed to the restructuring in principle just before the September 2024 presidential election.
The current government continued and successfully concluded this process on December 20, 2024, ensuring the issuance of new bonds to replace existing ones.
The restructuring of ISBs, which involves a total of USD 14.2 billion, including past due interest of USD 1.7 billion, was managed by the Ad Hoc Group (AHG) and a local banking consortium.
Prof. Fernando emphasized the government’s strong political commitment to economic stability, citing the positive recognition from rating agencies, which upgraded Sri Lanka’s credit rating due to the government’s timely actions and economic stabilization measures.
Responding to questions regarding Sri Lanka’s financial crisis, Prof. Fernando explained that the economic downturn was exacerbated by policies from previous governments, particularly the suspension of external debt servicing in April 2022, which led to the country’s financial troubles.
He assured that the current administration had laid the groundwork for financial stability and would continue steering the country towards economic recovery.
Looking ahead, Prof. Fernando expressed confidence that by the end of 2025, the results of the government’s efforts would be evident in the form of improved economic indicators and a better standard of living for the people of Sri Lanka.
Therefore, the government continued with the restructuring process and facilitated it to ensure the successful completion of the issuance of new bonds for the exchange of existing ones on 20th December 2024 in order to achieve the critical objective of stabilizing the economy in pursue of navigating the country with the growth and development trajectory towards a thriving nation and beautiful life,” he said.
