After India, China backs Sri Lanka’s effort to secure IMF bailout

After India, China backs Sri Lanka's effort to secure IMF bailout

The economic crisis caused by the shortage of foreign exchange caused public protests in Sri Lanka.

China has secured debt-ridden Sri Lanka at the request of the IMF to open a $2.9 billion bailout package for the country, days after India strongly supported its efforts. the island nation to secure a loan from a global lender to recover from the worst of the disaster. every economic crisis.

The Sunday Times reported that China’s Exim Bank sent a letter on Saturday allowing Sri Lanka to defer repayments for two years and agree to the International Monetary Fund’s (EFF) expanded fund facility.

The report was confirmed by Sri Lankan officials, who did not wish to be named.

China’s response comes after India stepped in first to provide the necessary guarantees last week.

India’s Finance Ministry last week sent a letter to the IMF to confirm its support to Sri Lanka on debt restructuring, ahead of Foreign Minister S Jaishankar’s visit to Colombo, concluding ends on Friday.

Mr. Jaishankar during the visit also informed that India had given the necessary guarantees to Sri Lanka regarding the bailout package.

Sri Lankan officials say that China has agreed to a short-term suspension of what Sri Lanka owes and expects Sri Lanka’s creditors to work out their medium and long-term commitments together.

The IMF last September approved a $2.9 billion bailout package for Sri Lanka over four years pending Sri Lanka’s ability to restructure its debt with its creditors — both bondholders and bondholders. bilateral bonds and government bonds.

As of the end of June 2022, Sri Lanka owed nearly $40 billion in bilateral, multilateral and commercial loans, according to figures released by the Ministry of Finance.

Chinese loans accounted for 20% of total debt and 43% of bilateral loans.

In April, Sri Lanka declared a default for the first time in its history as the economic crisis caused by a foreign exchange shortage sparked public protests.

Months of street protests led to the ouster of then-president Gotabaya Rajapaksa in mid-July. Rajapaksa began negotiations with the IMF after refusing to call for support from the global lender.

Officials said with assurances from creditors, the $2.9 billion facility could be approved by the IMF board in March.

Sri Lanka has introduced painful economic measures such as tax increases and utility rate increases. Trade unions and opposition groups have organized protests against the measures.

The IMF bailout has stalled as Sri Lanka pursues talks with its creditors to meet the global lender’s condition for the facility to help the country weather its worst economic crisis. since independence in 1948.

Earlier, Sri Lanka completed debt restructuring negotiations with Japan.

The IMF facility will allow the island nation to obtain bridging financing from markets and other lending institutions such as ADB and the World Bank.

(Except for the title, this story has not been edited by NDTV staff and is published from an aggregated feed.)

Featured video of the day

2 bodies each with one eye missing in Madhya Pradesh hospital, rat is suspect


Goz News: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably.

Related Articles

Back to top button