On Monday (Feb 5), Sri Lanka’s Foreign Minister disclosed the country’s expectation to attract approximately US$5 billion in foreign funds over the next two years following the finalization of its overseas debt restructuring. Sri Lanka faced a default on its overseas debt in May 2022, triggered by a severe shortage of foreign exchange reserves, leading to its most severe financial crisis since gaining independence from Britain in 1948.
Foreign Minister Ali Sabry informed Reuters that significant progress has been made in restructuring around US$11 billion of bilateral debt. The country aspires to secure agreements with all major creditors, including bondholders, by May at the latest.
Once the debt restructuring is completed, Sri Lanka plans to shift its focus towards restarting major infrastructure projects that were halted during the crisis. These projects include the development of a highway, expansion of the main airport near Colombo, and a US$2 billion light railway project in collaboration with Japan.
In an interview, Sabry stated, “We are looking at, within the next 12 to 24 months, somewhere in the region of about US$5 billion worth of foreign currency infusion into the country in terms of projects and also from the sale of some state-owned enterprises.”
Sri Lanka’s private creditors, encompassing international sovereign bonds, constitute approximately US$16 billion of the total debt, as indicated by Sabry.
