News
Sri Lanka’s debt negotiations stall over GDP growth projections and repayment terms – Nishan de Mel
In a recent televised interview, Nishan de Mel, the Executive Director of Verité Research, stated that holders of Sri Lanka’s International Sovereign Bonds (ISBs) have expressed concerns about specific aspects of the debt sustainability analysis conducted by the country alongside the IMF. This disagreement is one of the key hurdles in reaching an accord with them, he said.
Dr. de Mel said holders of Sri Lanka’s ISBs disagree with the IMF’s and Sri Lanka’s GDP growth projections. They believe that the potential economic growth of the country has been underestimated, he added.
He said that bondholders believed Sri Lanka had underestimated its economic growth potential, and therefore, its capacity to repay debt. “If the GDP growth potential is higher, then we can pay more. The bondholders argue that if Sri Lanka’s economy grows more than the IMF’s projections, then we should agree to pay them more,” he said. He further noted that Sri Lanka has acknowledged this possibility and has provided the bondholders with estimates of higher repayments contingent on achieving greater than projected GDP growth.
According to Dr. de Mel, while Sri Lanka has agreed to higher repayments if GDP exceeds forecasts, it has sought the flexibility to pay less if growth falls short of IMF estimates. There is currently a disagreement regarding the discrepancy between the higher payments Sri Lanka is willing to make and the amount the bondholders expect, centered around this variance in growth projections, Dr. de Mel said..
“This is natural, and we don’t need to panic,” he said.
He also said there are many challenges of forecasting, noting that the results of GDP growth projections rely heavily on the underlying theories and hypotheses used. He mentioned that the IMF had developed its GDP
projections for Sri Lanka by examining other countries that have undergone debt restructuring processes.
“However, neither Sri Lanka nor the IMF has revealed how they came up with these figures. Also, there is no one way of calculating this. If we underestimate the GDP growth, it’s good for Sri Lanka. If GDP growth is overestimated, this benefits the bond holders,” he said.
It was unlikely that IMF would delay the next tranche of the three-billion-dollar financial package due to the delay in coming to an agreement with ISB holders, he said. The main reason why there would be a delay in issuing the third tranche was that Sri Lanka had not kept many promises it has made to the IMF, he said.
The Executive Director of Verité Research said his institution had come up with novel way of debt restructuring, called Governance-Linked Bond. “We will present this to the world during a conference in Paris next month. The basic design of a Governance-Linked Bond is to have a coupon (interest rate) reduction, which is triggered when specific governance actions are achieved by a certain date.
This structure makes the bond “index eligible” (an important feature for bond-holders), as opposed to the Value Recovery Instrument, which has also been mooted in current negotiations. The same structure was recently proposed by bond-holders in a GDP-Linked rather than a Governance-Linked Bond. A good set of criteria for the Governance-Linked Bond will be that they (a) improve the probability of sustainable recovery, (b) are easily observable and verifiable, (c) have a high level of public support.”
News
Prime Minister of Sri Lanka holds a bilateral meeting with Minister for Education and Skills Development of Bhutan
On the sidelines of the inaugural Global Conscious Food Systems Summit 2026, being held in Bhutan from 31 August to 4 September 2026, Prime Minister of Sri Lanka, Dr. Harini Amarasuriya, in her capacity as Minister of Education, Higher Education and Vocational Education, held a productive bilateral meeting with Yeezang De Thapa, Minister for Education and Skills Development of Bhutan, on 03 September 2026.
The discussions focused on further strengthening and expanding Sri Lanka-Bhutan cooperation in the education sector, with particular emphasis on developing mutually beneficial initiatives through enhanced Government-to-Government engagement.
Both sides underscored the importance of deepening institutional cooperation and exploring new avenues for collaboration in education, higher education and vocational training, with a view to creating greater opportunities for students, educators and academic institutions of both countries.
During the meeting, both sides agreed to initiate discussions towards the finalization and signing of a Memorandum of Understanding (MoU) on cooperation in the fields of education and vocational training. It was also agreed that the implementation of the MoU could be facilitated through the establishment of a Joint Working Group, headed at the Secretary level, with meetings to be convened annually to review progress, identify new areas of cooperation, and facilitate the effective implementation of agreed activities.
The major areas of cooperation discussed included enhancing collaboration among universities and academic institutions, promoting academic and faculty exchanges, joint research and university programmes, strengthening training and capacity-building opportunities for educators and teachers, and sharing expertise and best practices in the education and vocational training sectors.
The two sides also discussed strengthening child protection and safeguarding mechanisms, promoting ethical values among students, and addressing violence against children while ensuring their safety, protection, well-being and access to quality education.
Opportunities for Bhutanese students to pursue undergraduate studies at universities in Sri Lanka were also discussed, with particular emphasis on Dentistry, Medicine (MBBS), and allied health disciplines such as Physiotherapy. The discussions further covered opportunities for postgraduate studies in medical and health sciences at Sri Lankan universities, as well as enhanced collaboration among universities and other academic institutions of the two countries.
The meeting provided a valuable opportunity for Sri Lanka and Bhutan to advance cooperation in education and vocational training and explore new avenues for long-term collaboration for the mutual benefit of students, educators and academic institutions of both countries.
(Prime Minister’s Media Division)
Prime Minister Dr. Harini Amarasuriya had an audience with His Majesty King Jigme Khesar Namgyel Wangchuck at the Tashichhodzong in Thimphu on September 02, during her official visit to the Kingdom of Bhutan.
The cordial discussion focused on Bhutan’s future development priorities and opportunities for cooperation between the two countries.
His Majesty expressed Bhutan’s interest in drawing on Sri Lanka’s experiences and expertise in areas relevant to its development plans. The discussion also focused on promoting investment between the two countries, including the possibility of establishing an investment zone in Bhutan.
The two sides also exchanged views on demographic challenges facing Bhutan, including the increasing migration of young people and its impact on the country’s population and future workforce.
The meeting highlighted the importance of strengthening bilateral cooperation and sharing experiences and best practices in support of the sustainable development of both countries.
(Prime Minister’s Media Division)
Sri Lanka Podujana Peramuna (SLPP) Member of Parliament Namal Rajapaksa has been arrested by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC).
Namal Rajapaksa had been summoned by CIABOC to provide a statement in connection with investigations into the controversial Airbus deal. He was subsequently arrested by CIABOC after recording his statement for over 5 hours.
Prime Minister of Sri Lanka holds a bilateral meeting with Minister for Education and Skills Development of Bhutan
Prime Minister Meets His Majesty the King of Bhutan
Kusal Mendis, Binura Fernando ruled out of T20I series in England
SLPP MP Namal Rajapaksa arrested by CIABOC
Devapathiraja clinch U15 Division I title with 33-run win over Royal
Mandhana’s record ton powers India into semi-finals
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