The International Monetary Fund (IMF) has welcomed India’s extending its support for Sri Lanka’s debt restructuring that will pave the way for a bailout amid the economic crisis the country is facing. New Delhi extended the support last week when the Indian financing ministry wrote a letter to the IMF on the issue and a formal announcement came with External Affairs Minister Dr S Jaishankar’s visit to the country.
An IMF spokesperson in response to a WION question confirmed that “India has indicated to the IMF management that it is committed to delivering financing/debt relief consistent with restoring the sustainability of Sri Lanka’s public debt under the prospective IMF-supported program”, adding, “we welcome the commitment it has provided”.
Sri Lanka is in the process of negotiating a bailout package from the IMF, but before that it needs approval from its top 3 creditors–India, China and Japan. India has been the first country to extend support to the country on the debt restructuring, which has been widely welcomed by the Sri Lankan government which hopes to get similar support from other creditors.
The spokesperson pointed that Sri Lanka is “engaged with other official bilateral creditors to obtain similar assurances” and as “soon as adequate assurances are obtained and remaining requirements are met, including by the Sri Lankan authorities, a Fund-supported program for Sri Lanka can be presented to the IMF’s Executive Board for approval that would unlock much needed financing.”
Sri Lanka is in talks with to get a bailout of $2.9 billion from the international financial institution. Last week in Colombo, standing alongside Sri Lankan President Ranil Wickremasinghe and Foreign minister Ali Sabry, EAM said, ‘We felt strongly that Sri Lanka’s creditors must take proactive steps to facilitate its recovery. India decided not to wait on others but to do what we believe is right. We extended financing assurances to the IMF to clear the way for Sri Lanka to move forward’.
Amid the economic crisis the country has been facing, India last year extended a financial support of USD 4 billion. Other than that, large consignments of humanitarian supplies, which included rice, milk powder, medicines were also sent to the country by New Delhi as part of its “neighbourhood first” policy.
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