China also restructures Sri Lanka's USD 4.2 billion debt

Sri Lanka, which is currently recovering from bankruptcy, has announced a USD 4.2 billion debt restructuring deal with EXIM Bank of China the same day it reached a USD 5.8 billion debt restructuring with other countries which issued loans to the single island nation as well.

Sri Lanka reached an agreement to restructure the USD 5.8 million debt with its creditors via the Official Creditor Committee (OCC) in Paris last Wednesday. The OCC members include France, India and Japan. However, China, which has issued the biggest line of credit to China is not a member of the Committee.

While Sri Lanka celebrates this win amidst efforts to steer the country out of its economic thunderstorm, OCC has requested Sri Lanka to provide details of debt deals with other countries as well.

A statement on AFP says that Sri Lanka is asked to provide "all information necessary for the OCC to ensure comparability of treatment".

Despite EXIM Bank's USD 4.2 billion debt restructure agreement, it is yet unclear what will happen of the private commercial loan given to Sri Lanka by China Development Bank (CDB), which amounts to MVR 2.18 billion.

Analysts say the CBD loan will likely be dealt with similar to the USD 12.55 billion in international sovereign bonds, on which negotiations continue.

According to treasury data, Sri Lanka's total foreign debt was estimated to be at USD 37 billion by the end of March.

Of the total USD 10.58 billion in bilateral debt owed by Sri Lanka, China accounts for USD 4.66 billion , while Japan loaned USD 2.35 billion and India USD 1.36 billion.

This debt restructuring is a bailout programme extended to Sri Lanka by the International Monetary Fund (IMF).

IMF also issued the last instalment of USD 336 million of the USD 2.9 billion rescue package to Sri Lanka, which is designed to rehabilitate the country's economic situation within the next four years.