ECONOMYNEXT – The Paris Club of Western lenders has informed the International Monetary Fund of their support for Sri Lanka debt re-structuring, a media report said, as the country seeks to re-structure its debt and get a bailout from the agency.
Bloomberg Newswires citing un-named sources said the Paris Club had communicated with the IMF.
There was no immediate official reaction from the IMF.
The IMF has so far only accepted the letter of debt re-structuring sent by India.
India sent a letter on without any wording on conditions relating to the actual treatment they are offering but agreed to re-structure debt in lines with a financing plan contained in a draft IMF agreement with Sri Lanka.
A letter from the Exim Bank of China to Sri Lanka which reportedly contained wrong wording such as the grace period they were prepared to offer.
Details have to be agreed after the IMF’s executive board approves a re-structuring plan.
Sri Lanka officials have said they were continuing to talk to China.
Paris Club, which has participated in debt re-structuring earlier was expected to provide debt assurance in line with IMF requirements as long as India and China, which was outside the group also did the same.
Negotiations with China had delayed IMF programs in several countries.
The US has said Paris Club was ready to support Sri Lanka but China has to also give assurances in line with requirement.
“We the United States is prepared to do its part,” US Under Secretary of State Victoria Nuland said during a visit to Sri Lanka.
“Paris Club partners are prepared to do their part.”
Paris Club and the International Monetary Fund is trying to get China, which is classified as an ad hoc participant in their deliberations to work more closely on debt workouts.
China is a large lender to several countries which are experiencing severe monetary instability at the moment.
Sri Lanka’s central bank has hike rates, reduced money printing and achieved external stability by December 2023.
However in January some domestic operations have been conducted in a bid to get interest rates down, which have been high due to a delay in unlocking foreign aid and fears of a domestic debt re-structuring.
Sovereign bond holders are also prepared to help Sri Lanka in line with a 4.5 percent external gross financing need ceiling by 2027, provided domestic debt rollovers were extended to match a ceiling of 8.5 percent, sources have said. (Colombo/Feb03/2023)
All the serious lenders will not send us any money as yet until the elections are held and the return to discipline and democracy are assured and put in place. We need a paradigm shift from all this muck and the political atmosphere tamed and brought back to true governance. The people have given pride of place and not the rogues and murderers who took all to be suckers and brought everyone to be idolatry posterior worshipers.