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Sri Lanka and China Agree on $4.2 Billion Debt Restructuring Deal

China and Sri Lanka have reached a significant debt restructuring agreement, clearing around $4.2 billion of outstanding debt, according to Sri Lanka’s Finance Ministry. This deal with China Exim Bank, the island nation’s largest single creditor, is a crucial step toward restoring Sri Lanka’s long-term debt sustainability and supporting economic recovery.

The agreement is expected to facilitate the approval of the IMF’s first review of the program, allowing for the disbursement of around $334 million. China holds nearly 10 percent of Sri Lanka’s external debt, and this agreement is seen as a key milestone in the country’s efforts to recover from its economic crisis.