The US will defer Sri Lanka’s debt for a year as tsunami bonus

The United States will restructure US$ 40 mn of Sri Lanka’s debt for this year, deferring payments for a year and freeing up cash for tsunami re-building. The United States will restructure US$ 40 mn of Sri Lanka’s debt for this year, deferring payments for a year and freeing up cash for tsunami re-building.

“The deferred debt will be repaid in seven equal semi-annual instalments, the first on December 01, 2006 and the last on December 01, 2009,” the Finance Ministry said in a statement on Friday.

“The agreement allows funds previously allocated for debt payments in 2005 to be used for relief and reconstruction activities in tsunami affected areas.”

The US debt covered by the agreement is held by the US Department of Agriculture (USDA) and the US Agency for International Development (USAID).

“This agreement will provide additional flexibility and liquidity for the government as it continues to meet the needs of those citizens adversely affected by last year’s tsunami,” Jeffrey Lunstead, US Ambassador to Sri Lanka said in a statement.

The agreement follows up on Sri Lanka’s agreement with the 19 member Paris Club – a grouping of some o