Sri Lanka expects final approval from the International Monetary Fund (IMF) for a $2.9bn loan in the third or fourth week of this month, says the president of the bankrupt island nation.
Ranil Wickremesinghe told parliament on Tuesday that with renewed support from China, all funding requirements had been met.
The South Asian nation of 22 million people is struggling with its worst economic crisis since its independence from Britain in 1948. It defaulted on its $46bn foreign debt last April, which caused months of food and fuel shortages around the nation.
Wickremesinghe said there were signs the economy was improving but that the country still did not have enough foreign currency for all its imports, making the IMF deal crucial so other creditors could also start releasing funds.
“Sri Lanka has completed all prior actions that were required by the IMF,” he said.
“Last night we received a new letter from the China Exim Bank. The central bank governor and I signed a letter of intent and sent it to the IMF. As a result of this step and financing assurances from India and the Paris Club, we expect approval for the programme either in the third or fourth week of March.”
Wickremesinghe’s administration has imposed sharp tax hikes, ended subsidies on petrol and electricity, and made plans to sell off loss-making state enterprises to satisfy the terms of the IMF bailout.
It was not clear what new support China, the world’s biggest sovereign creditor, extended to Sri Lanka on Monday.
In January, the Export-Import Bank of China offered Sri Lanka a two-year moratorium on its debt and said it would support the country’s efforts to secure the IMF loan, which a Sri Lankan source said at the time was not enough to meet IMF conditions.
China and India are Sri Lanka’s biggest lenders. By the end of 2020, Sri Lanka owed China’s Exim Bank $2.83bn or 3.5 percent of the island’s external debt, according to IMF data.
In total, Sri Lanka owed Chinese lenders $7.4bn, or nearly a fifth of public external debt, by end-2022, calculations by the China Africa Research Initiative showed.
Chinese foreign minister Qin Gang on Tuesday said the country would continue to participate in the settlement of international debt problems in a constructive manner.
https://www.aljazeera.com/news/2023...s-imf-nod-for-2-9bn-package-after-chinas-help
