Sri Lanka has signed a bilateral agreement with the Hungarian Export Credit Insurance PLC. (MEHIB) to reschedule roughly € 30 million in debt, marking one of the country’s first individual deals with a bilateral creditor since it entered formal debt restructuring talks.

The agreement follows the broader memorandum of understanding (MoU) reached last month with the Official Creditor Committee (OCC), which comprises several of Sri Lanka’s key sovereign lenders.

In a statement issued by the Finance Ministry, officials described the deal with Hungary as an “important milestone” in the government’s ongoing efforts to restore debt sustainability and stabilise the economy.

According to the Finance Ministry, the debt relief measure agreed with MEHIB involves rescheduling Sri Lanka’s outstanding obligations to Hungary, though exact details on repayment timelines or interest adjustments were not immediately disclosed.

The ministry framed the agreement as part of Sri Lanka’s push to expedite the restructuring process and meet commitments outlined under its International Monetary Fund (IMF) programme.

The deal was formalised this week by Finance, Planning and Economic Development Ministry Secretary Dr. Harshana Suriyapperuma, who signed on behalf of Sri Lanka.

Representing Hungary’s side were MEHIB Foreign Corporate Risk Management and Claims and Recoveries Director Györgyi Rehoregh and Claims and Recoveries Head Dr. Adrienn Hegyi Szénásiné.

While relatively modest in size compared to Sri Lanka’s total external debt stock - which stands above $ 37 billion - agreements with individual bilateral creditors are seen as essential steps in rebuilding the country’s credit profile after it defaulted in 2022.

The government is simultaneously negotiating with a range of other bilateral lenders as well as private bondholders to secure comparable debt treatments.

Sri Lanka has pledged under its IMF-backed programme to bring debt levels onto a sustainable path, including reducing public debt to 95% of GDP by 2032.