Sri Lanka has successfully concluded the restructuring of approximately $1.4 billion in bilateral debt with India, marking a significant milestone during the official visit of Indian Prime Minister Narendra Modi to Colombo.
Indian Foreign Secretary Vikram Misri confirmed the development at a press briefing in New Delhi, stating that the restructuring process was formalized through the exchange of binding bilateral agreements. “India remains committed to an investment-led approach in Sri Lanka, with strategic support through grants and concessional funding to facilitate the country’s long-term and sustainable economic recovery,” he noted.
Addressing the media in Colombo, Prime Minister Modi underscored India’s continued economic assistance to Sri Lanka, revealing that over $100 million had been converted into concessional loans and grants over the past six months. Additionally, India has agreed to lower interest rates on repayments to ease Sri Lanka’s financial burden.
Foreign Secretary Misri highlighted that India has extended nearly $4.5 billion in financial assistance to Sri Lanka since the onset of the island nation’s economic crisis in 2022. This support has included currency swaps, credit lines for essential imports, and budgetary aid.
The debt agreement with India comes on the heels of Sri Lanka’s $12.5 billion restructuring deal with international commercial creditors, finalized in December 2024. Under that agreement, Sri Lanka issued new bonds to replace existing obligations, a move seen as essential to restoring fiscal stability and investor confidence.
As of the end of November 2024, Sri Lanka’s total external debt stood at Rs. 10.6 trillion. The country’s ongoing engagements with multilateral partners, including the International Monetary Fund and key bilateral lenders like India and China, are critical to its broader debt sustainability and economic recovery strategy.
