COLOMBO (NewsRadio); The International Monetary Fund has confirmed that India has committed to help ease the debt burden of Sri Lanka as part of a possible IMF-supported program.
An IMF spokesperson said in a statement, Sri Lanka is engaged with other official bilateral creditors to obtain similar assurances.
The Reuters News Agency quoted an IMF spokesperson as saying, as soon as adequate assurances are obtained and remaining requirements are met, including by the Sri Lankan authorities, an IMF-supported program for Sri Lanka can be presented to the Executive Board for approval.
The official said the IMF Board approval would unlock much needed financing for Sri Lanka.
On Thursday, India’s Ministry of External Affairs announced that India has formally sent to the International Monetary Fund its assurance which the IMF body wants from creditors for providing a bailout to Sri Lanka.
The Ministry expressed hope that it helps Sri Lanka “close the deal”.
India External Affairs Ministry Spokesperson Arindam Bagchi said, “We would like to be supportive, we have been supportive bilaterally in assistance. There is an important element now of having a sustainable debt framework and structure for Sri Lanka. The IMF is leading that and as part of that they wanted financing assurances from other creditors. We have done that. We have formally sent it to the IMF.”
He said “We are hopeful that this and the conversations with the IMF would help close this deal and make a change on how the debt is restructured, additional financing comes in and Sri Lanka is able to move to a path of more sustainable fiscal management”.
Meanwhile, Sri Lanka is expected to receive a two-year debt moratorium from China as a short-term measure.
An official from the Ministry of Finance informed NewsRadio that the debt assurance from China will take Sri Lanka closer to securing the International Monetary Fund Executive Board approval for a 48-month arrangement under the Extended Fund Facility (EFF) in an amount of about USD 2.9 billion.
Last September, local officials and the IMF team reached staff-level agreement to support Sri Lanka’s economic adjustment and reform policies with a 48-month Extended Fund Facility (EFF).
Accordingly, Sri Lanka commenced debt restructuring talks with Paris Club members, India, Japan and China.
The Finance Ministry confirmed that a round of talks will be held with Paris Club members this week to finalize the debt restructuring process.
The Paris Club has already indicated it is willing to take a haircut and support Sri Lanka’s programme with the IMF while the government previously announced that it had concluded debt restructuring talks with Japan.
The government will now finalize the draft and go to the IMF for board approval.
State Minister Shehan Semasinghe informed NewsRadio that they are hoping to obtain the IMF Board approval in the first quarter of this year which will also unlock more funding from bilateral and multilateral leaders.