India writes to IMF backing Sri Lanka’s debt restructuring plan
India has formally notified that it would support Sri Lanka’s debt restructuring plan, Bloomberg News reported on Tuesday, citing a source with knowledge of the matter.
Sri Lanka has said it is confident of reaching an IMF board approval for loan in the first quarter of 2023.
Sri Lanka still needs similar assurances from China, Japan and so-called Paris Club members before the IMF board can approve the loan program
On Monday, a delegation of China’s Communist Party led by Vice Minister Chen Zhou assured Prime Minister Dinesh Gunawardena that Beijing would stand by Sri Lanka during this crisis. “I’m confident that Sri Lanka will have good news very soon,” Chen said, according to a Jan. 16 statement.
Until recently, debt negotiations yielded little progress since Sri Lanka defaulted in May, with creditors bickering on the size of losses they are willing to accept and whether local debt should be included in the restructuring. Sri Lanka’s end-2022 target for IMF board approval has already been missed and Standard Chartered Plc predicted delays in the process. The latest remarks from officials offer some optimism.
“With very positive developments taking place over the past 12 hours, Sri Lanka is confident of reaching IMF board approval in the first quarter of 2023,” Sri Lanka’s junior Finance Minister Shehan Semasinghe said by phone Tuesday, when asked if India had assured support. He declined to elaborate. (Reuters / Bloomberg)
