In June, the government concluded a deal with its bilateral lenders to restructure its official credit amounting to US$6 billion.
Under the deal announced on Sep 19, private creditors holding more than half of international sovereign bonds and foreign commercial loans to the South Asian nation agreed to a 27 per cent haircut on their loans.
They also agreed to a further 11 per cent reduction on the interest owed to them.
International sovereign bonds account for US$12.5 billion and the balance of US$2.2 billion is owed to the China Development Bank.
Sri Lanka’s external debt stood at US$46 billion at the time of its foreign debt default in 2022, when it ran out of foreign exchange to finance even the most essential imports such as food and fuel.
The bond restructuring endorsed by the new government must still go to parliament for ratification.
Dissanayake dissolved the assembly days after he was sworn in and called a snap election for Nov 14, a year ahead of schedule. The legislature is set to have its first session on Nov 21.
Austerity measures in line with the IMF bailout loan of US$2.9 billion secured last year helped stabilise the economy but also caused severe hardships for low-income Sri Lankans.
The IMF has said that Sri Lanka returned to growth in the wake of the crisis, but warned its economy was still not out of the woods.
https://www.channelnewsasia.com/asia/sri-lanka-approves-controversial-foreign-debt-deal-4660436
