Sri Lanka hopes that debt treatment chapter will soon be closed – Treasury Secretary Mahinda Siriwardena

Treasury and Finance Ministry Secretary Mahinda Siriwardena on Thursday said that Sri Lanka hopes that the debt treatment chapter will soon be closed, and we can resume a robust financial relationship, including fresh financing for high quality, priority projects.

He added that China has also played a pivotal role in supporting Sri Lanka’s debt treatment efforts in response to the unprecedented, deep and most complex economic crisis experienced since mid-2021.

He was speaking at the 2024 China Aid Training Alumni Reception held in Colombo on Thursday,

“China was the first among the official sector creditors to announce an Agreement in Principle (AIP) on the key financial terms for the treatment of debts owed by Sri Lanka to Exim Bank of China.

Subsequently, following cordial and constructive discussions, the two sides reached a final agreement on debt treatment terms in June 2024, on the same day when a similar MoU was signed with the Official Creditor Committee (OCC) comprising 17 official sector lenders to Sri Lanka and co-chaired by France, India and Japan”, he said.

He added that following the agreement coming into force, Exim Bank of China became the first external lender to conclude the debt treatment process. “Excellent progress has also been made on the debt treatment relating to China Development Bank (CDB). We are now in the final stages of finalizing Comparability of Treatment (CoT) matters for CDB relating to the OCC”, he said.

“We all know how complex and technically challenging this debt treatment process has been, both in terms of ensuring compatibility with the IMF’s Debt Sustainability Analysis (DSA) as well as ensuring CoT with other creditors”.

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