COLOMBO, 21 Jan 2023:
Sri Lanka has secured India’s support as it seeks to come out of its acute financial crisis by securing a bailout package from the International Monetary Fund (IMF), according to official sources yesterday.
“India has extended its hand in support (…) to officially back our debt restructuring program by conveying financial assurances to the International Monetary Fund,” Sri Lanka’s foreign affairs minister Ali Sabry said during a joint press conference with his Indian counterpart Subrahmanyam Jaishankar in Colombo.
India thus becomes the first country to provide support to help stabilise the island nation’s economy as it witnesses its worst crisis due to a lack of foreign reserves and high external debt.
The island nation has reached a preliminary agreement with the IMF for a US$2.9 billion credit line to help exit the crisis as protests continue over the deteriorating quality of life, with people facing rising food prices, fuel shortages and power outage.
“We are all aware that Sri Lanka is at a decisive moment in discussions with the IMF. In order to place our economy on the path of IMF-assisted recovery, we needed timely assurances from our creditors,” Sabry said, adding that in this situation, once more India has stood up.
“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,” said Jaishankar, on his part.
The Asian country now awaits a similar response from China, another of its most powerful lenders, to help the country emerge from the economic crisis and offer guarantees to the IMF.
On Thursday, US ambassador to Sri Lanka, Julie Chung, tweeted her country was ready to assist Sri Lanka “unlock” assistance from the IMF “when all creditors agree to fair and equitable treatment.”