Sri Lanka is preparing to finalize agreements to restructure its bilateral debt with India and Japan, scheduled for Wednesday. Foreign Minister M.U.M. Ali Sabry confirmed this development, noting that President Ranil Wickremesinghe briefed the Cabinet on progress earlier this week.

Last week, Cabinet spokesman Minister Bandula Gunawardana disclosed Sri Lanka's readiness to sign agreements with its bilateral creditors, marking a significant step toward resuming loan-funded projects within the country.

Since declaring a sovereign default in 2022, Sri Lanka has engaged in negotiations with the Paris Club, India, and China to address its debt challenges. Preliminary agreements were already reached last year. Amidst a severe economic crisis, India played a crucial role by extending assistance exceeding USD 4 billion, which helped mitigate Sri Lanka's foreign exchange and essential supply shortages.

With financial support secured from India and other creditors, the International Monetary Fund (IMF) sanctioned financing in March of the previous year, enabling Sri Lanka to initiate its economic recovery.

The debt restructuring initiative involves extending maturity dates and implementing a moratorium without reducing the principal amount, while adhering to a specific 'Net Present Value' formula. Earlier this year, President Wickremesinghe informed Parliament that the restructuring might include a moratorium lasting until December 2027, with repayments stretching until 2042.

The Sri Lankan Information Office announced that President Wickremesinghe will deliver a special national address on Wednesday evening, expected to focus on the details and implications of the debt restructuring plan.

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