Sri Lanka nears IMF bailout as China, India back debt plan, says Wickremesinghe
- Bankrupt island nation needs a massive injection of International Monetary Fund cash as it continues to battle economic crisis, including runaway inflation
- Sri Lanka needs assurances from India, China and others before the IMF board can approve the loan programme
Sri Lanka’s debt negotiations with China and India “are successful”, according to President Ranil Wickremesinghe, bringing the bankrupt nation closer to clearing a major hurdle to unlock US$2.9 billion from the International Monetary Fund.
The nation’s president, who doubles as finance minister, spoke before the parliament on Tuesday without providing details. Before that, a person with knowledge of the matter said that India late on Monday formally notified that it would support Sri Lanka’s debt restructuring plan.
Sri Lanka needs similar assurances from China, Japan and so-called Paris Club members – official creditors who try to find sustainable solutions to payment difficulties experienced by debtor countries – before the IMF board can approve the loan programme. Sri Lanka concluded debt restructuring talks with Japan, Wickremesinghe said last week, without sharing details.
A delegation from China is expected to be in Sri Lanka until January 18 and Indian Foreign Minister S. Jaishankar is expected to visit from January 19 ahead of the island nation celebrating 75 years of independence from British rule on February 4.
The country of 22 million people is facing its worst economic crisis since independence from Britain in 1948, and policymakers have grappled with multiple challenges over the past year including widespread protests, a shortage of dollars, runaway inflation and a steep recession.
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On Monday a delegation from China 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 January 16 statement.