SL seeks US $ 17bn foreign debt relief; urges domestic creditors to contribute

• President says US $ 17bn debt relief sought out of total foreign debt of US $ 41bn
• By end of 2022, SL’s domestic debt amounted to US $ 42.1bn
• Says proposals for restructuring both foreign and domestic debt will be presented to Cabinet 

President Ranil Wickremesinghe on Tuesday said the foreign creditors are expected to contribute US $ 17 billion towards the country’s debt restructuring efforts, within a five-year period and the domestic creditors should also make their due contribution towards the debt restructuring.

“What we are requesting from the foreign creditors is US $ 17 billion debt relief, out of the total foreign debt of US $ 41 billion, in the next five years. In the same way, we need relief from the domestic creditors,” Wickremesinghe said during the inauguration of the Gampaha District Secretariat Administrative Complex, on Tuesday.

Wickremesinghe highlighted the urgent need to restructure the country’s debt, stating that without such measures, the public debt would exceed 100 percent of Gross Domestic Product (GDP) by 2035.
Sri Lanka’s total public debt, comprising both domestic and foreign debt, amounted to US $ 83.7 billion by the end of 2022, representing 128.3 percent of GDP. 

Of this amount, the foreign debt totalled US $ 41.1 billion, accounting for 63.6 percent of GDP, while domestic debt amounted to US $ 42.1 billion, which constituted 64.6 percent of GDP.

To ensure debt sustainability in Sri Lanka, Wickremesinghe emphasised the need for restructuring both external and domestic debt.
He said proposals for restructuring both foreign and domestic debt would be presented to the Cabinet on Wednesday.
Meanwhile, Wickremesinghe assured that the restructuring of domestic debt would have no impact on the membership balance of any public funds, including the Employees’ Provident Fund. 

He emphasised that the rate of return for superannuation funds would not be affected in any way.
He further stated that the restructuring of domestic debt would not pose any threat to the stability of the country’s banking system, whether it is public or private banks.

He specifically mentioned that the deposits of more than 50 million bank depositors would remain unaffected and there would be no changes to the current interest rates paid on bank deposits.