IMF says 2.9bn loan bailout for Sri Lanka tied to debt relief from bilateral creditors
The International Monetary Fund said its approval of the $2.9 billion loan bailout of the crisis-riddled Sri Lanka will depend on the country securing assurances on debt relief from its bilateral creditors, Bloomberg reported yesterday
Bloomberg quoted an IMF spokesperson who said “Sri Lanka continues to engage with official bilateral creditors to obtain financing assurances and also continues to advance domestic reforms. As soon as adequate assurances are obtained and remaining requirements are met, including by the Sri Lankan authorities, the EFF arrangement for Sri Lanka can be presented to the IMF’s Executive Board for approval.”
Bloomberg reported that the Paris Club – an informal group of rich western creditors — and India, have provided formal support to the multilateral lender for the loan recast.
China has instead offered term extensions, while urging others to adopt a similar approach.Access to funds will boost foreign-currency reserves that are barely above $2 billion and help the nation curb sky-high inflation, steer its $81 billion economy toward recovery after facing the worst recession, since Independence, Bloomberg said. Sri Lanka has about $50 billion in foreign currency debt, of which about $10 billion is mainly split between China, Japan and India, according to government data, as of December.
