COLOMBO (NewsRadio); 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 next 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.
Meanwhile, last week, India informed the International Monetary Fund that it strongly supports Sri Lanka’s debt restructuring plan.
India External Affairs Ministry Spokesperson Arindam Bagchi said India provided the assurance which the IMF wants from creditors to grant the bailout package to Sri Lanka.
Following India’s move, China has now provided an assurance with a debt moratorium.
China while providing the moratorium on the short-run has also requested creditors to work together to finalize medium-term and long-term commitments.
During a meeting with Prime Minister Dinesh Gunawardena last week, China’s International Department Vice Minister Chen Zhou said “Sri Lanka will have some good news soon”.
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.
