Sri Lanka Aims for Debt Restructuring Framework by Mid-2024, President Affirms Recovery
In a recent announcement on Wednesday, President Ranil Wickremesinghe revealed Sri Lanka’s ambitious plan to implement a debt restructuring framework within the first six months of 2024. Despite grappling with its worst financial crisis in decades due to a severe foreign exchange shortage, the president expressed confidence in the nation’s ongoing recovery.
Taking office in mid-2022 amidst the challenging financial circumstances, President Wickremesinghe outlined the country’s economic goals, including a targeted GDP growth of up to 3% for the current year. While the World Bank estimated a contraction of 3.8% in Sri Lanka’s economy last year, projections indicate a growth of 1.7% in 2024. The Central Bank of Sri Lanka, meanwhile, is even more optimistic, forecasting a 3% growth rate for the year.
Addressing parliament during its ceremonial opening, President Wickremesinghe compared the economic rebound to a “V-shaped recovery,” emphasizing the need for sustained efforts. Acknowledging the challenges ahead, he underscored that there are no quick fixes, particularly given the nation’s overall debt standing at $91 billion as of September.
Sri Lanka faced a severe financial setback in May 2022 when it defaulted on its overseas debt amid a foreign exchange reserves shortage. Since then, the country has made progress on restructuring about $11 billion of bilateral debt, with plans to finalize agreements with key creditors, including bondholders, by May. Foreign Minister Ali Sabry highlighted this week that the country has been actively engaging in the restructuring process.
Notably, Sri Lanka secured a $2.9 billion bailout from the International Monetary Fund (IMF) in March of the previous year, contributing to mitigating inflation, enhancing state revenue, and bolstering foreign exchange reserves. The president’s announcement reflects the government’s commitment to navigate the challenges and steer the nation towards a more stable economic trajectory.
