By The Pulseline News Desk
Sri Lanka has completed the restructuring of approximately 94% of its external debt covered by the restructuring process, with agreements already reached in principle bringing the overall progress to around 99%, according to the latest report by the Global Sovereign Debt Roundtable (GSDR).
The seventh GSDR Co-Chairs Progress Report, released on October 14, has described Sri Lanka’s debt restructuring as “almost completed”, highlighting progress on the debt exchange involving SriLankan Airlines and the continued implementation of bilateral agreements with official creditors.
The report has said Sri Lankan authorities were continuing good-faith negotiations with the remaining commercial creditors, with only a limited portion of the restructuring process yet to be concluded.
The progress marks a significant milestone in Sri Lanka’s efforts to emerge from its sovereign debt crisis, which culminated in the country’s 2022 economic collapse and subsequent default on its external debt.
The GSDR has identified Sri Lanka as one of several countries that have made substantial progress in resolving sovereign debt distress following the global economic disruptions triggered by the COVID-19 pandemic.
Hamilton Reserve Bank litigation remains pending
Despite the progress, legal proceedings involving Hamilton Reserve Bank remain unresolved.
According to the report, both parties have submitted their final arguments between June and August 2026, with a court ruling still awaited. No date has been set for the decision.
The litigation represents one of the outstanding issues in Sri Lanka’s broader debt resolution process, even as restructuring agreements with other creditors have advanced.
IMF programme marks another milestone
The report has also noted that Sri Lanka successfully completed the combined fifth and sixth reviews under its International Monetary Fund (IMF)-supported Extended Fund Facility (EFF) programme in May 2026.
The reviews marked further progress under the economic reform programme introduced following the country’s financial crisis, which included fiscal consolidation, debt restructuring and measures to restore macroeconomic stability.
The IMF programme has been a central component of Sri Lanka’s recovery efforts, alongside negotiations with external creditors and the implementation of reforms intended to strengthen public finances.
Sri Lanka’s experience informs global debt reforms
Beyond the country’s own recovery, the GSDR highlighted the contribution of Sri Lanka’s debt restructuring experience to efforts to improve the international framework for resolving sovereign debt crises.
The report has said lessons from Sri Lanka and other recent restructuring cases had helped shape approaches intended to make future debt workouts faster and more effective.
It has also pointed to the continued use of the GSDR Sovereign Debt Restructuring Playbook, which provides guidance to governments navigating debt restructuring and was updated this year to incorporate lessons from countries including Sri Lanka.
The GSDR has noted that most sovereign debt restructurings initiated in 2021 and 2022 were now largely complete, with Sri Lanka among the countries closest to concluding the process.
For Sri Lanka, the remaining challenge is to finalise outstanding commercial creditor negotiations while continuing to implement existing agreements and maintain the economic reforms underpinning its recovery.
Although the near-completion of the restructuring process represents a major step towards restoring debt sustainability, the longer-term outcome will depend on the country’s ability to sustain economic growth, strengthen public finances and avoid a renewed accumulation of unsustainable debt.
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