Sri Lanka is nearing the conclusion of its recovery journey following the historic sovereign default in 2022, as highlighted in the sixth Cochairs Progress Report from the Global Sovereign Debt Roundtable (GSDR), released on April 15, 2026. While the country has made significant strides in its debt restructuring process, certain unresolved issues still linger.
The nation faced severe economic and political turmoil, leading to its external debt default in mid-2022. Since then, Sri Lanka has diligently worked on restructuring its debts outside the G20’s Common Framework. A significant milestone was reached in December 2024 when the Eurobond exchange was finalized. Additionally, progress has been made in signing bilateral agreements with official creditors, with seven out of a total of seventeen deals already completed.
According to the report, “Sri Lanka’s debt restructuring is nearly complete, with residual commercial creditor negotiations the last remaining hurdle.” In December 2025, the country received emergency assistance from the IMF through its Rapid Financing Instrument, which was crucial following a cyclone that impacted recovery efforts. Concurrently, the World Bank allocated up to US$120 million from its ongoing projects for emergency relief and to help restore vital services and infrastructure.
Ongoing negotiations with a small group of remaining commercial creditors—who account for just 1.7 percent of the total debt undergoing restructuring—are being conducted in good faith by the Sri Lankan authorities. A key milestone was reached in July 2025 with the completion of the fourth IMF program review, reflecting growing confidence in the nation’s reform initiatives. Credit rating agencies have taken notice, with Moody’s assigning a Caa1 rating in December 2023, and both S&P Global Ratings and Fitch Ratings upgrading Sri Lanka to CCC+ in September and December 2024, respectively—the first ratings increase since the debt crisis.
The GSDR report emphasizes that while Sri Lanka’s situation is evolving positively, it also highlights broader systemic challenges encountered in similar restructuring cases. The process of finalizing bilateral agreements with official creditors, known as memoranda of understanding (MOUs), has been slow across various cases, prompting the GSDR to recommend that countries strive to complete these agreements within a year of signing the MOU, barring special circumstances.
Furthermore, the report warns of persistent debt vulnerabilities faced by low-income nations amid increasing global uncertainties. For Sri Lanka, maintaining fiscal discipline, successfully completing the remaining negotiations with creditors, and fully restoring access to markets will be crucial in solidifying the progress it has achieved.
