COLOMBO: Sri Lanka’s $12.5 billion bondholder debt rework has received support from bilateral creditors and the International Monetary Fund, the finance ministry said in a statement on Friday, a huge boost to the island nation’s fragile economy.

Sri Lanka defaulted on its foreign debt for the first time ever in May 2022, engulfed in a severe crisis and buckling under its high debt burden and dwindling foreign exchange reserves.

Sri Lanka to move forward with third review of near $3bn IMF bailout

Last month, it reached a draft deal with creditors to restructure $12.5 billion of international bonds, and said on Friday it had got backing from the IMF and its bilateral creditors, including India, China and Japan for the same.

Sri Lanka’s finance ministry said it had received formal confirmation from the Official Creditors Committee that the terms of the Agreement in Principle were compatible with the Comparability of Treatment principle.