Sri Lanka has signed a key bilateral amendatory loan agreement with the Saudi Fund for Development (SFD) to restructure approximately 517 million Saudi Riyals (SAR) — roughly USD 137 million — as part of its ongoing external debt restructuring program, the Ministry of Finance announced.
The debt restructuring arrangement, formalized on Monday, marks a major step in Sri Lanka’s efforts to stabilize its economy following the 2022 debt crisis. The deal is part of broader negotiations with bilateral and multilateral creditors to restore debt sustainability.
The restructured amount of SAR 516.95 million reflects loans that were initially extended by Saudi Arabia on concessionary terms. These funds were used to support vital development projects across the island, and continued to be disbursed even after Sri Lanka declared a debt standstill in April 2022, the Ministry noted.
In a statement, the Finance Ministry commended the Kingdom of Saudi Arabia’s pivotal role during Sri Lanka’s most economically challenging period, stating:
“This assistance enabled significant progress in development projects without disruptions, and the concessionary nature of these loans provided much-needed relief to the country’s debt burden.”
The agreements were signed by Treasury Secretary Harshana Suriyapperuma for Sri Lanka, and Sultan Abdulrahman A. Almarshad, CEO of the SFD, for Saudi Arabia.
Debt restructuring is a process where a country or organization renegotiates the terms of its existing debt to reduce financial pressure. This may include extending repayment periods, lowering interest rates, or reducing the principal amount. For Sri Lanka, restructuring its external debt — which includes bilateral loans from other nations — is essential to regain fiscal stability and secure IMF assistance.
Sri Lanka’s agreement with Saudi Arabia comes on the heels of similar deals with other bilateral creditors as the country works to finalize its debt restructuring program and restore investor confidence.
“The conclusion of this agreement will certainly pave the way to deepen the long-standing bilateral relationship between the Kingdom of Saudi Arabia and the Government of Sri Lanka,” the Ministry added.