Sri Lanka repays $600 m to India
Sri Lanka recently repaid US$400 million to India, along with an additional $200 million towards a $2.2 billion debt owed to the Asian Clearing Union (ACU), as part of a phased repayment strategy, Finance Ministry sources said.
The Central Bank of Sri Lanka has been repaying the ACU credit and India’s $400 million swap in installments through central bank arrangements.
The IMF staff report revealed that these debts will be consolidated into a $2.6 billion bilateral swap, which will be repaid in tranches from 2023 to 2026.
This restructuring follows emergency loans provided by India during Sri Lanka’s 2022 economic crisis, which totalled $4 billion, with $3.3 billion utilised that year. Of this, $2 billion was owed to the ACU and $400 million to the Reserve Bank of India (RBI).
Sri Lanka has already repaid $225 million to the RBI in early 2024, according to official data.
The extended repayment plan to 2026 has provided some debt relief and allowed
Sri Lanka’s central bank greater flexibility in managing foreign reserves.
This aligns with IMF goals to increase reserves from $3.6 billion in 2023 to $5.3 billion by the end of 2024.
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