Sri Lanka

Sri Lanka will hand over management of its $209 million Chinese-built airport to two Indian and Russian companies, a cabinet statement said on Friday, as the island nation attempts to reduce losses from its state enterprises. Mattala Rajapaksa International Airport (MRIA), funded by China EXIM Bank, has stoked controversy since its opening in 2013 due to a low number of flights, environmentally sensitive location and persistent financial losses. The airport's management will be handed over to Shaurya Aeronautics (Pvt) Ltd.

Sri Lanka on Tuesday rejected international bondholders' proposal to restructure more than $12 billion in debt, putting at risk critical International Monetary Fund support and delaying its efforts to resolve a two-year-long debt crisis, Reuters reported. Some of the proposal's "baseline" assessments and a lack of a contingency option in the case of continued economic weakness were two the main reasons the deal was not agreed, the government said in a statement.

Sri Lanka secured initial approval for the next loan tranche from a $3 billion International Monetary Fund bailout program, as the nation seeks to complete its debt restructuring, Bloomberg News reported. The staff-level agreement for the second review of the program gives the nation access to a payout of about $337 million — subject to approval from the IMF’s executive board, the Washington-based lender said in a statement. Funding is also contingent on implementation of prior actions, completion of financing assurances and adequate progress on debt restructuring, according to the statement.

Sri Lanka's president said Wednesday that he is seeking a loan repayment moratorium until 2028 as the debt-ridden country tries to emerge from bankruptcy, the Associated Press reported. President Ranil Wickremesinghe told Parliament the government is asking lenders to accept a plan to defer payments for five years and then pay down the debts from the beginning of 2028 through 2042.

Debt-stricken Sri Lanka’s economic reform program is yielding the first signs of recovery, but the improvements still need to translate into improved living conditions for its people, the International Monetary Fund said on Friday, the Associated Press reported. Sri Lanka has been struggling with an economic crisis since declaring bankruptcy in April 2022 with more than $83 billion in debt, more than half of it to foreign creditors. The crisis caused severe shortages of food, fuel and other necessities. Strident public protests led to the ouster of then-President Gotabaya Rajapaksa.

Sri Lanka's bankrupt government said Friday that a foreign debt restructure would be finalised by the beginning of April, after signs the economy was emerging from its worst crisis on record, AFP News reported. The island nation defaulted on its $46 billion foreign debt in 2022 after a foreign exchange wipeout left it unable to import food, fuel and other essentials. It secured a $2.9 billion International Monetary Fund (IMF) bailout last year which is conditional on a debt deal that satisfies foreign creditors.

Sri Lanka said on Wednesday that it has reached an agreement in principle with a group of creditors including India and Japan on debt restructuring, a crucial move toward unlocking a second instalment of a $2.9 billion bailout package from the International Monetary Fund, the Associated Press reported. The agreement with the Official Creditor Committee covers approximately $5.9 billion of outstanding public debt and consists of a mix of long-term maturity extension and reduction in interest rates, a statement from the country's Finance Ministry said.

Sri Lanka’s president boosted government workers’ pay and increased state pensions, seeking to shore up support before next year’s election as the economy emerges from its worst crisis in seven decades, Bloomberg News reported. Tax revenue is expected to increase more than 47% next year, President Ranil Wickremesinghe outlined in his budget speech in Colombo on Monday, after the government recently hiked the value-added tax rate and it clamps down on tax evasion. Borrowing will surge in order to recapitalize banks and pay off foreign debt, he said.

A senior U.S. Treasury official on Monday said there were signs of "potential improvement" in sovereign debt restructuring cases and more vulnerable countries were expected to seek help, but further work was needed to accelerate the process, Reuters reported. Treasury Assistant Secretary for International Finance Brent Neiman noted advances in the cases of Zambia, Ghana and Sri Lanka over the past year, along with development of new technical approaches, adding his hope that Ghana would reach agreement on its external restructuring in the coming weeks.

Sri Lanka's sovereign dollar bonds fell more than 2 cents on Thursday, Tradeweb data showed, after authorities from the island nation expressed "serious reservations" about a debt restructuring proposal put forward by international bondholders, Reuters reported. Sri Lanka is in the midst of a debt restructuring after defaulting last year during a punishing economic crisis. The November 2025 maturity fell at the quickest pace, losing 2.45 cents as of 0946 GMT, but most of the country's sovereign dollar bonds had lost 2 cents or more.