Creditor nations likely to agree on Sri Lanka debt restructuring

(Reuters) – A group of Sri Lanka’s creditor nations are likely to reach an agreement on debt relief and an extension of repayment deadlines for the South Asian nation, Japan’s Jiji News reported on Wednesday, without naming a source or giving any details.

Japan co-chairs this group, together with France and India. China is Sri Lanka’s largest bilateral creditor and has steered clear of joining this group as a formal member.

Mired in its worst financial crisis in decades, Sri Lanka has been trying to reach restructuring deals with creditors since last year.

The agreement with the group of creditor nations came about a month after the debt-ridden island nation reached a deal with the Export-Import Bank of China covering about $4.2 billion of outstanding debt.

The EXIM deal will help Sri Lanka clear the first review of the bailout by Dec. 6 under the International Monetary Fund (IMF) executive board program, while securing a second IMF tranche of about $334 million, its finance ministry says.

In so doing, Colombo is also seeking to receive more clarity on its debt restructuring talks with key bilateral creditors. The approval would unlock $330 million in funding and signal progress for the four-year programme.