Before IMF’s First Review, China Extends Help To Sri Lanka To Address Debt Issues – News18

Sri Lanka’s largest bilateral creditor China, is likely going to help the cash-strapped country in effectively addressing the debt challenges as it has to finalise the external and internal debt for restructuring of $41 billion by September before the International Monetary Fund’s (IMF) first review, reported PTI. The IMF is set to conduct its first review of the $2.9 billion bailout granted to the island country in March, this year from September 11-19.

Foreign Minister of China, Wang Yi quoted that they are always Sri Lanka’s reliable strategic partner and appreciates that Sri Lanka has always been friendly to China and stood by them on issues related to its core interests.

Sri Lanka is currently negotiating with its external creditors to meet the IMF’s condition for its first review. The IMF in March approved a nearly $3 billion bailout for the crisis-ridden country. To restructure the debt of $41 billion, the crisis-hit country should agree with all its external creditors by the coming month on the programme.

The first review will consider the programme’s performance until the end of June and if it gets approved by both the executive board and staff, it would allow a disbursement of around $338 million to Sri Lanka.

IMF Deputy Managing Director Kenji Okamura who visited Sri Lanka in June issued a statement in which he said that Sri Lanka’s economy is showing tentative signs of improvement, in part due to the implementation of critical policy actions. But he also pointed out that it remained challenging. “Now, more than ever, it is essential to continue the reform momentum under strong ownership by both the authorities and the Sri Lankan people,” he added.

Sri Lanka witnessed its worst economic crisis in history after the country’s foreign exchange reserves fell into a critical low and the agitated public of the country came out on the streets in the form of protests due to shortage of electricity, fuel, fertilisers and essential commodities.

Under Neighbourhood First Policy, India also extended its help to the cash-stricken country. India provided multi-pronged assistance of about $4 billion to Sri Lanka, last year through multiple credit lines and currency support.