India tells IMF it will support Sri Lanka’s debt restructuring plan. This country of 22 million people is facing its worst economic crisis since it gained independence from Britain in 1948, and policymakers have grappled with challenges over the past year, including runaway inflation and deep recessions, including a Dollar scarcity.
Sri Lanka needs the backing of China and India, its two largest bilateral lenders, to reach a final agreement with the International Monetary Fund on a $2.9 billion loan that will be crucial to getting its struggling economy back on track.
It seems that India has informed the International Monetary Fund (IMF) it will support Sri Lanka’s debt restructuring plan, a source with direct knowledge of the matter said, as the island nation races to secure a $2.9 billion bailout from the global lender. India, one of Sri Lanka’s major bilateral creditors, gave its assurances late Monday.
But this information is not official. Sri Lanka may still needs similar guarantees from China, Japan and members of the so-called Paris Club before the IMF board can approve the loan program. Standard Chartered predicted earlier this month that the multilateral lender may not approve the target approved by the IMF board by the end of 2022 until April-June, meaning talks with commercial creditors could be delayed until the second half of 2022.