COLOMBO: Sri Lanka’s bilateral lenders who agreed to restructure close to $6 billion in loans have demanded “comparability of treatment” with other creditors, including China. The Official Creditor Committee (OCC), led by Japan, France and India, have requested details of Colombo’s other debt deals, a statement seen by AFP on Thursday read.

The grouping agreed in Paris on Wednesday to restructure $5.8 billion in loans. But on the same day, Colombo struck another deal with the Exim Bank of China to cover $4.2 billion.

The OCC, which also included the United States, Canada and several European nations, said it had asked Colombo to provide “all information necessary for the OCC to ensure comparability of treatment”. It also expected Colombo to strike a deal with private creditors “on terms at least as favorable” as the OCC had offered.

Sri Lanka defaulted on its foreign debt in April 2022 after running out of foreign exchange, and the unprecedented economic crisis forced then-president Gotabaya Rajapaksa to step down. Sri Lanka had expected to rapidly conclude debt restructuring in line with a $2.9 billion IMF bailout program, but delays in securing an agreement with China had held up the process.

Beijing is by far the largest single creditor of Sri Lanka, but Chinese funding is split into concessionary bilateral loans and private commercial credit. While $4.2 billion of Chinese bilateral credit had been treated under debt restructuring on Wednesday, there was no word on a $2.18 billion loan from the China Development Bank considered a private commercial loan. Sources involved with the process said the CDB loan was likely to be treated on par with the $12.55 billion International Sovereign Bonds, on which negotiations continue.

Sri Lanka’s total foreign debt was estimated at $37 billion, according to treasury data from the end of March. China accounts for $4.66 billion of a total of $10.58 billion in bilateral debt, followed by Japan with $2.35 billion, and India with $1.36 billion.

Sri Lanka’s agreements with China and other creditor nations to restructure about $10 billion in bilateral debt brought it a step closer towards restoring debt sustainability, the International Monetary Fund (IMF) said on Thursday.

Sri Lankan officials in Paris inked the agreement with the Official Creditor Committee (OCC) co-chaired by Japan, India and France that have lent a combined $5.8 billion. The committee is now awaiting details of a separate agreement that was signed with China EXIM Bank to rework $4.2 billion to be shared with them to ensure comparability of treatment, OCC said in a statement. Sri Lanka, however, still needs to convince bondholders to restructure about $12.5 billion in international bonds.

“We hope that there will be swift progress on reaching agreements with external private creditors in the near future,” Peter Breuer, IMF’s senior mission chief for Sri Lanka, said in a statement.

Bilateral lenders said they hoped an agreement with bondholders would be “on terms at least as favorable as the terms offered by the OCC.” The restructuring of bilateral debt agreements was one of the key conditions set by the IMF under a $2.9 billion bailout program that helped Sri Lanka tame inflation, stabilize its currency, and improve government finances.

The central bank estimates the economy will expand 3 percent in 2024 after contracting 2.3 percent last year. Sri Lanka, whose total external debt is $37 billion, also has to finalize arrangements with China Development Bank to restructure debt of $2.2 billion, according to latest finance ministry data.

Under the restructuring plan, Sri Lanka can delay repaying bilateral creditors till 2028. During this period, the government and creditors can arrange new loans out to 2043. Once the restructuring is completed, Sri Lanka aims to reduce its debt by $16.9 billion, the government said. It will seek approval from parliament on July 2 to proceed with the deals, President Ranil Wickremesinghe said during an address to the nation late on Wednesday. – Agencies