Sri Lanka and Japan Finalize $2.5 Billion Debt Restructuring Deal

The agreement marks the first formal deal with Sri Lanka's bilateral creditors, a critical step in its economic recovery efforts.

Sri Lanka signed a $2.5 billion debt restructuring deal with Japan, its second-largest bilateral lender, following two years of negotiations.
The agreement is part of a broader debt treatment plan considered essential by the IMF to support Sri Lanka's economic recovery after its 2022 default on $46 billion in external debt.
Japan's concessions include restructuring a 369.45 billion yen loan, with Japan highlighting Sri Lanka's strategic importance in the Indo-Pacific region.
This is the first deal finalized with a member of Sri Lanka's 17-member Official Creditor Committee, though similar agreements are still needed with China and India.
Sri Lanka's recovery has been bolstered by an IMF bailout package and austerity measures, but officials stress the need to maintain reforms to avoid future crises.