Only USD 19.8 billion will be allocated for restructuring out of the total domestic debt amount of USD 42.1 billion, President’s Senior Advisor on Economic Affairs Dr. R.H.S. Samaratunga said.

He said that following the government’s decision to seek support from the International Monetary Fund (IMF), a staff-level agreement was reached in September last year.

“However, the IMF said that the proposal cannot be implemented until Sri Lanka’s debt sustainability is established.”

“As a result, extensive discussions were held between the government and international creditors from September 1 to March 20. The primary objective was to obtain a financing certificate from these lenders, and we successfully completed this process in the second week of March. Consequently, by March 20, the IMF agreed to accept our request and proceed further.”

“This programme is designed to operate for a period of four years and consists of five key elements. Firstly, there is a focus on revenue-based fiscal consolidation, particularly due to the significant drop in the country’s gross domestic product to 8% in 2020-2021. This involves enhancing tax collection and addressing related issues.”

“Secondly, debt restructuring is a critical aspect as highlighted by the IMF, which has raised concerns about Sri Lanka’s debt sustainability. The third element pertains to establishing price stability within the country. Fourthly, it is crucial to preserve the stability of the financial sector. Lastly, the government needs to adopt an anti-corruption policy. These goals require the implementation of structural reforms.”

“With regard to these elements, the government has already implemented policies on various matters apart from debt restructuring.”

“The total domestic debt discussed today amounts to 42.1 billion US dollars, out of which 19.8 billion will be allocated for restructuring. This includes debt owed to the Central Bank of Sri Lanka, commercial banks, other banks, the Employees Provident Fund, and four other institutions that have provided loans to the government.”

“While debt restructuring among these institutions will occur through different methods, the ultimate aim is to provide the government with some relief through a mixed programme,” he said.