Sri Lanka is reportedly in a race against time to reach agreements with creditors, including bondholders, before June, when the third tranche of the International Monetary Fund’s (IMF) Extended Fund Facility is expected.
Sri Lanka is scheduled to receive the next installment of US$ 337 million in June after the third review of the program.
Before that, Sri Lanka should sign the Memorandum of Understanding (MoU) with the Paris Club for bilateral debt restructuring. Additionally, a separate agreement should be signed with China for debt restructuring. These agreements should be signed on terms acceptable to all bilateral creditors.
However, sources related to the government indicate that the agreement with commercial creditors, including bondholders, is being successfully concluded before the specified deadline.
Sri Lanka declared bankruptcy in April 2022, and the country has since defaulted on $6 billion in debt payments.
According to the agreements to be reached, the government plans to pay off 37% of the debt within the first six years after the resumption of debt paying, 51% in 6-20 years, and the remaining 12% after 20 years.
The presidential election is scheduled to be held later this year. The Election Commission is expected to issue the gazette notice calling the election by the end of June.
Cabinet spokesperson Minister Bandula Gunawardena stated that regardless of the election outcome, the loan will continue to be paid according to the approved plan.