Sri Lanka, which is currently in debt, has thanked India for issuing guarantees to the International Monetary Fund (IMF) that will allow the island nation to access a $2.9 billion bailout package. The guarantees were necessary for Sri Lanka to secure the loan from the IMF.
India’s Ministry of Finance recently issued a letter to the IMF to confirm its support for Sri Lanka on the issue of debt restructuring. External Affairs Minister S. Jaishankar also gave assurances to Sri Lanka’s leaders during a recent visit to Colombo, making India the first major lender to publicly back the island nation’s efforts to recover from its worst-ever economic crisis.
In a statement on Wednesday, the Governor of the Central Bank of Sri Lanka, Nandalal Weerasinghe, thanked India for issuing the necessary guarantees required by the IMF for unlocking the $2.9 billion bailout for the country. He said that India had “clearly given financial assurances which are acceptable to the IMF” and that Sri Lanka should “first of all we should thank the Indian authorities for issuing that letter”.
Sri Lanka is also trying to secure financial assurances from its major creditors – China, Japan, and India – in order to obtain the bailout package from the IMF. The IMF had put the bailout on hold as Sri Lanka pursued talks with creditors to meet the global lender’s conditions for it.
China has also given Sri Lanka the financing assurances required by the IMF to unlock the bailout package. The debt restructuring talks have made good progress, according to Weerasinghe. However, he did not comment on the reported assurances issued by China to the Sri Lankan finance ministry that they would offer a 2-year repayment moratorium as part of the restructuring.