US agrees to defer US$ 40 mn in Sri Lanka’s debt, repayable over 4 years

The United States will defer US$ 40 mn in Sri Lanka’s debt for one year, on condition the savings are routed for tsunami relief in affected coastal regions of the island, US officials said Friday. The United States will defer US$ 40 mn in Sri Lanka’s debt for one year, on condition the savings are routed for tsunami relief in affected coastal regions of the island, US officials said Friday.

“Debt relief for the country includes short term debt referral, which allows Sri Lanka and Indonesia to defer official government debt to the US for one year, and restructure it to repay over the following four years,” US Ambassador for Sri Lanka, Jeffery Lunstead told reporters on Friday.

The United States will defer US$ 40 mn owed this year of a total debt bill of US$ 700 mn to date, if the offer is taken up by the Sri Lankan government.

“If this is done, what is saved should be spent by the government on tsunami relief,” Lunstead said.

Sri Lanka has also been lobbying the United States for trade relief, including a suspension of duties on apparel exports to the US for three years on tsunami grounds.

Apparel accounts for over half of Sri Lanka’s total exports. Litigation on tsunami trad