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India Welcomes Sri Lanka’s Debt Restructuring Agreement

India on Wednesday welcomed Sri Lanka’s debt restructuring agreement with a group of creditor nations and affirmed its ongoing support for the island nation’s economic recovery, including promoting long-term investments.

India is one of the co-chairs of the Official Creditors Committee (OCC), established in April last year to finalize a plan for restructuring Sri Lanka’s debt. The Sri Lankan government announced that it has concluded a long-delayed debt restructuring agreement for USD 5.8 billion with its bilateral lenders, including India and China.

“After several rounds of engagements, the OCC signed the Memorandum of Understanding (MoU) on debt restructuring on June 26,” India’s Ministry of External Affairs (MEA) stated.

The MEA emphasized that this milestone demonstrates the significant progress Sri Lanka has made in stabilizing its economy and moving towards reform and growth. “As one of the co-chairs of the OCC, along with France and Japan, India has been steadfast in its commitment to the stabilization, recovery, and growth of the Sri Lankan economy,” the statement added.

India’s commitment was also highlighted by its unprecedented financial support of USD 4 billion to Sri Lanka. India was the first creditor nation to convey financing assurances to the International Monetary Fund (IMF), which facilitated Sri Lanka’s securing of the IMF program.

The MEA reaffirmed, “India will continue to support Sri Lanka’s economic recovery, including by promoting long-term investments in its key economic sectors.”

Following the IMF’s approval of the Extended Fund Facility (EFF) program for Sri Lanka on March 20 last year, the OCC was launched to hold discussions among the island nation’s bilateral creditors to finalize a debt restructuring plan.

Sri Lanka experienced a severe economic crisis in 2022, with a decline in foreign exchange reserves leading to a default on foreign debt. India, along with many other countries, extended help to Sri Lanka to manage the situation.

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