Sri Lanka restructures nearly $931 million in credit lines with India

The deal between the two countries will facilitate deeper cooperation on multiple projects including an energy hub agreed to during a visit by Indian Prime Minister Narendra Modi last month.

Sri Lanka's President Anura Kumara Dissanayake and India's Prime Minister Narendra Modi shake hands during a photo opportunity ahead of their meeting at Hyderabad House in New Delhi, India, December 16, 2024. / Reuters/Stringer

Sri Lanka has restructured nearly $931 million in lines of credit and buyers' credit facility agreements with the Indian government, the island nation's finance ministry said on May 15.

The deal between the two countries will facilitate deeper cooperation on multiple projects including an energy hub agreed to during a visit by Indian Prime Minister Narendra Modi last month.

The debt restructuring covers seven line of credit and four buyers credit facility agreements that were made available to Sri Lanka by the Export- Import Bank (EXIM) of India, the finance ministry statement said.

New Delhi and Colombo have worked to deepen ties as India's southern neighbour recovers after plunging into financial crisis in 2022. India provided $4 billion in assistance to Sri Lanka to help it weather the tumult including a swap arrangement and other emergency assistance.

The crisis left Sri Lanka struggling to pay for fuel, medicine and cooking gas. A $2.9 billion bailout from the International Monetary Fund (IMF), which approved the fourth review of its program last month, has played a critical role in Sri Lanka's post-crisis recovery.

Sri Lanka finalised a deal with Japan, another key creditor in March to restructure $2.5 billion in debt after entering into a preliminary deal with key bilateral lenders last June.

It still needs to sign similar agreements with China for about $4.75 billion in debt.

Colombo also secured a deal to restructure $12.5 billion of its debt with international bondholders last December.

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