Restructuring Over $931 Million in Credit Agreements with India Strategy by Sri Lanka
Colombo Chronicles: Sri Lanka's Debt Restructuring Journey
Sri Lanka's economic turnaround journey is in full swing, with the nation recently refinancing a whopping $931 million through improved credit deals with the Indian government. This financial makeover comes as part of a broader collaboration on various development projects, including an energy hub, following a visit by Indian Prime Minister Narendra Modi last month.
According to the finance ministry, this deal ironed out seven Line of Credit and four Buyer’s Credit Facility agreements, provided by India's Export-Import Bank (EXIM), initially offered to Sri Lanka. The restructured agreements, signed in March and April of 2025, are intended to strengthen Sri Lanka's financial footing and intensify its economical collaboration with India.
As the island nation recovers from its 2022 financial meltdown, India has extended a helping hand, contributing $4 billion in aid to help Sri Lanka navigate the turbulent times. This aid consisted of swap arrangements, emergency aid, and more. The crisis had left Sri Lanka grappling with funding essentials like fuel, medicine, and cooking gas.
In an effort to tackle its debts, Sri Lanka has also signed a preliminary restructuring deal with Japan, another major creditor, to manage $2.5 billion in debt obligations. Similarly, the country is in discussions with China regarding debts totaling approximately $4.75 billion and hopes to finalize these negotiations soon.
Moreover, Sri Lanka sealed a deal with international bondholders back in December 2022, restructuring a massive $12.5 billion in debt. The country has been making significant progress in managing its external debt obligations with key creditors such as India, Japan, and China.
The financial lifeline from the International Monetary Fund (IMF) has also been instrumental in supporting Sri Lanka's post-crisis recovery. The IMF approved the fourth review of its program in March 2025, offering a $2.9 billion bailout package to the island nation. Despite these advancements, global economic uncertainties persist, and could potentially impact Sri Lanka's ongoing recovery efforts.
The restructured credit deals with India, a notable part of Sri Lanka's financial recovery, will strengthen the nation's business relations and help manage its debt. The finance ministry's restructured agreements with India's EXIM, aimed at financial stabilization, will intensify economic collaboration between the two countries.
