Tokyo: A group of creditor countries led by Japan and others has reached a broad agreement with Sri Lanka on debt restructuring for the cash-strapped South Asian island nation, both sides announced Wednesday.

The deal includes an extension of repayment deadlines and an interest rate reduction for Sri Lanka, which is effectively in default.

Chaired jointly by Japan, India, and France, the creditor group had been discussing the matter since April this year.

On Wednesday, Masato Kanda, Japan’s vice minister of finance for international affairs, revealed that the deal does not include a principal reduction, adding that the agreement was made with an extended debt repayment arrangement in mind. He declined to comment further on the details of the deal.

Sri Lanka’s external debts stood at 36.5 billion dollars at the end of June, including 10.9 billion dollars from bilateral lenders. China is the largest bilateral lender, with 4.6 billion dollars, followed by Japan, with 2.4 billion dollars, and India, with 1.6 billion dollars.

China, which is not officially part of the creditor group, announced in October that it had separately reached a deal with Sri Lanka to restructure 4.2 billion dollars of its loans.

Kanda said that the agreement between the creditor group and Sri Lanka is comparable to the deal between China and Sri Lanka.

The International Monetary Fund announced in October that it had reached a working-level agreement on a 330-million-dollar bailout for Sri Lanka. The IMF’s Executive Board is expected to formally approve the bailout as early as next month.

JIJI Press