China’s debt moratorium offer to Sri Lanka not sufficient for IMF to approve funding program: Report

INTERNATIONAL DESK: China’s offer to Sri Lanka of a two-year moratorium on its debt is not adequate to clear the way for the International Monetary Fund (IMF) to allow a funding program, Daily Mirror reported citing diplomatic sources.

Citing sources, the news report said that the IMF needs more assurances from China to secure IMF board approval for the bailout package for Sri Lanka. Earlier, China’s Foreign Ministry said that Export-import Bank of China (EXIM) has extended debt to Sri Lanka.

EXIM has reportedly offered a two-year moratorium to Sri Lanka on its debt. EXIM said that it will help Sri Lanka in its efforts to secure a USD 2.9 billion loan from the IMF, as per the Daily Mirror report. However, the IMF is not satisfied with the offer, Daily Mirror cited a top diplomatic source. Meanwhile, the Paris Club is expected to make an announcement regarding Sri Lanka’s debt, as per the Daily Mirror report.

Last month, the Paris Club of creditor nations announced that it will recommend a 10-year moratorium for Sri Lanka, along with another 15 years of debt restructuring, in order to save the island nation from further economic and financial collapse.

Meanwhile, India has extended the financing assurances to the International Monetary Fund to clear the way for Sri Lanka to move forward. Notably, India, Japan and China are among main creditor nations of Sri Lanka.

During his visit to Sri Lanka, External Affairs Minister S Jaishankar announced that India has given the IMF financing assurances to clear the path for the island nation, according to the statement released by the Ministry of External Affairs.

“This year, in a developing situation that was beginning to cause concern, the same sentiment reasserted itself. We felt strongly that Sri Lanka’s creditors must take proactive steps to facilitate its recovery,” Jaishankar said in a press statement.

“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. Our expectation is that this will not only strengthen Sri Lanka’s position but ensure that all bilateral creditors are dealt with equally,” he added.

In a press statement, EAM S Jaishankar said that his visit to Colombo is to express India’s solidarity with Sri Lanka during these difficult moments. He said that India extended about USD 4 billion in terms of credits and rollovers to help Sri Lanka amid its economic crisis. He stated that India will encourage greater investments in the Sri Lankan economy, especially in energy, tourism and infrastructure sectors.

“My primary purpose of coming to Colombo at this time is to express India’s solidarity with Sri Lanka during these difficult moments. As you all know, last year, India extended about USD 4 billion in terms of credits and rollovers to help Sri Lanka get through an economic crisis. For us, it was an issue of ‘Neighbourhood First’ and not leaving a partner to fend for themselves,” Jaishankar said in a press statement. (ANI)