Sri Lanka, which is facing a financial crisis, needs a conditional International Monetary Fund (IMF) package of $ 2.9 billion. Breaking the biggest hurdle to achieve this, China has assured to help Sri Lanka in debt restructuring.
President Ranil Wickremesinghe informed Parliament on Tuesday that the government received a letter of assurance from China's Exim Bank on Monday night, which was immediately forwarded to the IMF. Wickremesinghe, who also holds the finance portfolio, assured that once the IMF agreement is in place, the deal will be tabled in Parliament along with the government's plan and draft road map.
Sri Lanka is China's biggest borrower
Sri Lanka is the biggest debtor of China. 52 percent of its loan is from China. Due to this, the bailout package received by Sri Lanka from the IMF was becoming an obstacle. In January, the US ambassador to Sri Lanka, Julie Chung, urged China not to be a spoiler, referring to Sri Lanka's effort to reach IMF conditions to get a bailout. For the sake of the Sri Lankan people, we certainly hope that China will not block the way forward for the IMF settlement, he complained.
Sri Lanka has no time to delay – US Ambassador
In an interview with the BBC in January, the US ambassador claimed that China, as the largest bilateral creditor, had a large onus to move forward with Sri Lanka's debt restructuring. Ambassador Chung said, "We hope they will not delay as Sri Lanka has no time to delay." They urgently need these assurances.
India's outstanding debt to the crisis-hit country's closest neighbor stood at around $1.7 billion till June last year. After India, in February the Paris Club of creditors announced its support for Sri Lanka's debt restructuring.
President said – the hope of relief from IMF
Wickremesinghe further said that concerning the bailout package from the IMF, we have fulfilled our part of the responsibility. We expect the IMF to complete its work on this issue by the third or fourth week of the month. He further added that this will further help us in getting funds from the World Bank and ADB. Significantly, the previous Chinese letter offering a two-year moratorium on loan repayment was deemed insufficient by the IMF.
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