Sri Lanka Achieves USD 8 Billion Debt Relief: Wickremesinghe

Colombo, Jul 5 (PTI) President Ranil Wickremesinghe on Friday said Sri Lanka saved USD 8 billion over the past two years due to “effective economic management” and emphasised that the nation is now recovering from economic turmoil due to debt restructuring.

Sri Lanka finalised debt restructuring agreements with bilateral lenders, including India and China, in Paris on June 26. Earlier on June 12, the International Monetary Fund (IMF) disbursed the third tranche of USD 336 million from its USD 2.9 billion bailout package to Sri Lanka.

In April 2022, the island nation declared its first-ever sovereign default since gaining Independence from Britain in 1948. The unprecedented financial crisis led President Ranil Wickremesinghe's predecessor Gotabaya Rajapaksa to quit office in 2022 amid civil unrest.

“Thanks to the harvest in 2022-2023, the country's production increased, and tourism thrived. As a result, we've achieved USD 8 billion relief and paved the way to debt relief,” the President said on Friday.

“When the economy collapses, it affects ordinary people the most. When it recovers, its benefits reach another segment,” the President's Media Division (PMD) said in a statement quoting Wickremesinghe.

The President was speaking at a ceremony held in Kurunegala, about 100 km northeast of Colombo.

“Now, our country has emerged from bankruptcy. We have a four-year plan to repay our loans, offering reduced burdens and interest cuts that will yield USD 5 billion in savings. We are currently in negotiations with private contractors. As a result, approximately USD 3 billion has been withdrawn,” he said.

“In total, USD 8 billion has been allocated for our use. Additionally, we have been granted USD 2 billion under relaxed terms. This does not account for funds expected from China or assistance from India. As a result, we have saved USD 8 billion over the past two years,” Wickremesinghe, also the finance minister, added.

On Tuesday, while making a special statement in Parliament, Wickremesinghe announced: “Sri Lanka's external debt now totals USD 37 billion, which includes USD 10.6 billion in bilateral credit and USD 11.7 billion in multilateral credit. The commercial debt is USD 14.7 billion, of which USD 12.5 billion is in sovereign bonds.”

At Kurunegala, the President presented symbolic deeds to 463 recipients out of 73,143 eligible in the district under the ‘Urumaya' national programme, the initiative for freehold land title.

Addressing the gathering, he noted that he assumed leadership during a period of governmental uncertainty. He emphasised that the nation is now recovering from economic turmoil due to "effective economic management," the PMD statement said.

Wickremesinghe also recalled how before he assumed office, during President Gotabaya Rajapaksa's tenure, India provided USD 3.5 billion on favourable loan terms and Bangladesh also contributed USD 200 million. “Despite economic challenges, we managed to repay USD 200 million,” he said.

Wickremesinghe emphasised that true socialism lies in granting free land rights to the people, dismissing mere talk about socialism, the PMD statement said.