UK and Sri Lanka sign bilateral debt restructuring agreement reached in June 2024

• Bilateral debt agreement between the UK and Sri Lanka establishes terms reached between Sri Lanka and Official Creditor Committee in June 2024.

• Agreement allows Sri Lanka to resume interest payments, with a grace period to repay the main debt amount until 2028

British High Commissioner Andrew Patrick and Sri Lanka’s Secretary to the Ministry of Finance Dr. Harshana Suriyapperuma signed a bilateral debt agreement between the UK and Sri Lanka at the Ministry of Finance Planning and Economic Development today (22 August).

The bilateral agreement implements the terms of the debt restructuring agreement reached in June 2024 between Sri Lanka and an Official Creditor Committee co-chaired by France, India, and Japan plus the UK and other Paris Club creditors.

The British High Commissioner to Sri Lanka, Andrew Patrick, said:

“We are delighted to sign the UK’s bilateral debt agreement with Sri Lanka. This important milestone is a key step to restore debt sustainability and regain investor confidence to support Sri Lanka’s economic recovery”.

Today’s agreement enables interest payments to UK Export Finance (UKEF) to resume immediately, with a grace period on principal repayments until 2028. Once the first interest payments from Sri Lanka are received, UKEF will start the process of reassessing its cover position for Sri Lanka.

The agreement restores debt sustainability and helps Sri Lanka regain access to international investment, supporting its recovery from the 2022 economic crisis and providing crucial breathing space for the country’s economic recovery.