Colombo, Aug 11: Sri Lanka has begun negotiations to restructure a set of 2022 bonds excluded from the nation’s landmark December 2024 debt overhaul, marking another step in its effort to move beyond the worst economic crisis in decades.
According to a statement from the Treasury, the talks are aimed at bringing these holdout bonds into line with the terms already agreed upon with earlier consenting creditors, in compliance with the International Monetary Fund’s (IMF) debt sustainability requirements.
Hamilton Reserve Bank Lawsuit Stalls Full Settlement
The holdout creditors include Hamilton Reserve Bank, which holds roughly 25% of the disputed bonds. The bank has filed a lawsuit seeking full repayment, a move that has delayed a complete resolution of Sri Lanka’s debt restructuring efforts.
While Hamilton Reserve Bank maintains its legal challenge, other bondholders have now entered negotiations for a settlement on terms similar to those accepted in earlier agreements.
Other Debt Talks in Progress
Sri Lankan authorities have also confirmed ongoing discussions to resolve:
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$50 million owed to two commercial banks
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$175 million bond issued by SriLankan Airlines
The government hopes to finalize these deals to strengthen financial stability and restore investor confidence.
Debt Overhaul Paved Way for IMF Support
The voluntary swap of the 2022 bonds in earlier stages of restructuring was seen as a milestone in Sri Lanka’s recovery path, unlocking IMF assistance and prompting credit rating upgrades.
The South Asian island nation plunged into external default in May 2022, after a crippling financial crisis triggered by depleted foreign reserves, soaring inflation, and political turmoil.
Signs of Stabilization After Crisis
Following sweeping economic reforms and international backing — including over $4.5 billion in humanitarian and financial assistance from India — Sri Lanka has begun to stabilize.
However, the legal dispute with Hamilton Reserve Bank remains a key obstacle before the country can fully close the chapter on its historic debt default.