Sri Lanka to sign debt restructuring with Hungary

By Nishel Fernando 
The government will soon enter into an agreement on debt restructuring with Hungarian Export Credit Insurance Private Limited (HECIPL), which will include the loan concessions, under the debt restructuring exercise.
This week, President Anura Kumara Dissanayake, in his capacity as the Finance, Economic Stabilisation and National Policies Minister, sought the approval of the Cabinet of Ministers to proceed with the agreement, which aims to revise the outstanding debts and provide a loan concession to Sri Lanka.
“HECIPL has agreed to grant a loan concession through the revision of outstanding debts and such revised all loans will be covered under this proposed agreement,” the Government Information Department said.
The debt restructuring process was initiated following the government’s decision in April 2022 to suspend debt servicing on selected foreign government loans. The country completed the external debt restructuring process late last year.

With the Cabinet approval now secured, the government is poised to finalise the agreement with HECIPL, underscoring its commitment to transparent and equitable debt restructuring practices.
Hungary has been providing funding for various initiatives, including infrastructure development assistance, the construction of the flyovers in Kohuwala and Gatambe being among them. After defaulting the external debt payments in 2022, funding for these projects was frozen.
The agreement also reflects the collaborative efforts between Sri Lanka and Hungary, highlighting Hungary’s support for 
Sri Lanka’s economic reforms.