By Anadolu staff
ANKARA (AA) – Debt-torn Sri Lanka and its creditor nations, including Japan, have reached a basic agreement over the former’s debt restructuring, a senior official of the Japanese Finance Ministry said on Wednesday.
The creditor nations and Sri Lanka will work out details and formalize the agreement in a memorandum of understanding, Masato Kanda, vice finance minister for international affairs, told reporters, according to Tokyo-based Kyodo News.
Some 20 countries – led by Japan, France, and India – established a framework earlier this year to discuss how to proceed with Colombo’s debt restructuring.
China, Sri Lanka's largest bilateral creditor, joined the discussions as an observer.
The South Asian island nation, last year, faced its worst financial crisis in decades due to economic mismanagement and the effects of the coronavirus pandemic.
It declared bankruptcy last year and as of September 2023, Sri Lanka had $35.1 billion in foreign debt, of which 19% was owed to China, 7% to Japan, and 5% to India.
International Monetary Fund (IMF) said Sri Lanka's public debt was at 128% of its gross domestic product at the end of last year, which is "unsustainable."
In March this year, Sri Lanka received the first $330 million tranche of the IMF's nearly $3 billion bailout meant to support the island country.