Sri Lanka Aims for Six-Month Debt Fix; US$3 Billion Annual Payment Looms

COLOMBO (News 1st); Sri Lankan President Ranil Wickremesinghe in his policy statement to parliament on Wednesday (7), outlined a six-month timeline for completing a comprehensive debt restructuring plan, highlighting its importance for economic recovery while acknowledging the significant challenges ahead.

"Throughout the past, concerted efforts have been made to formulate a strategic plan for repaying this debt. The domestic debt restructuring plan has been successfully executed as the first step, and a policy agreement for restructuring has been reached with foreign creditors as the second step. Negotiations with private creditors are presently in progress. Anticipated in the initial six months of this year, the intricate restructuring plan is poised to form the foundational framework for restoring our economy to normalcy," explained Wickremesinghe.

He expressed confidence in finalizing a comprehensive restructuring plan within the first six months of 2024, paving the way for economic normalcy.

President Wickremesinghe noted that by September 2023 Sri Lanka's total debt burden was US $ 91 billion, and it will take a considerable period of time to settle this debt.

"In order to meet our debt, we need to source the funds locally. It is imperative that we generate this income; otherwise, we risk falling into the debt trap once again," said the President.

"As a result of debt restructuring, we will be able to reduce the annual payment. Nevertheless, even under such a situation we will still have to pay around US$ 03 billion per year. We cannot continue to be paying in this manner. We need to create a balance between our income and expenditure. Our budget deficit is at an acute stage. This year government revenue stood at Rs. 4,127 billion and expenditure was Rs. 6,978 billion. Out of this Rs. 2,651 billion is for debt repayment. This clearly indicates our debt burden," he further elaborated in parliament.