Sri Lanka targets debt restructuring framework in first 6 months of 2024, says President Ranil Wickremesinghe

The president of Sri Lanka stated on Wednesday that the country is confidently emerging from its worst financial crisis in decades and plans to put in place a debt restructuring framework during the first half of 2024.

During a crippling financial crisis brought on by a chronic lack of foreign cash, President Ranil Wickremesinghe, who assumed office in mid-2022, stated that the island nation aimed to increase its gross domestic product (GDP) by as much as 3% this year.

According to World Bank estimates, Sri Lanka’s GDP shrank by 3.8% in the previous year and is predicted to expand by 1.7% in 2024. This year, the central bank of Sri Lanka has forecast a more optimistic growth of 3%.

“Our economy plummeted like a meteorite but we also managed to recover at rocket pace,” Wickremesinghe, 74, told the ceremonial opening of parliament. “We are in the middle of a V-shaped recovery.”

“Now we have to continue on this path. It will not be easy. There are no short-term solutions,” he said, adding that Sri Lanka’s overall debt at the end of September was at $91 billion.

The island country in South Asia went into default on its foreign debt in May 2022 as a result of the biggest financial crisis since gaining independence from Britain in 1948 due to a significant shortage of foreign exchange reserves.

According to Foreign Minister Ali Sabry, who spoke with Reuters this week, Sri Lanka has made headway on reorganising its $11 billion bilateral debt and plans to finalise deals with all significant creditors, including bondholders, by May at the latest.

In March of last year, the government concluded a $2.9 billion bailout with the International Monetary Fund (IMF), which increased state revenue, strengthened foreign exchange reserves, and helped control the country’s rapidly rising inflation.