Colombo: Sri Lankan president Ranil Wickremesinghe said his country may soon receive approval for its $2. 9 billion bailout plan as China has provided critical debt restructuring promises.
According to Wickremesinghe, the Central Bank governor and he promptly issued a letter of intent to the IMF for final approval after receiving a letter from China's Exim bank with the assurances. Now that we have completed our portion, he predicted that the IMF will finish its contribution by the third or fourth week of this month.
China owns 10% of Sri Lanka’s foreign debt, which exceeds $51 billion. Its delayed assurances were seen as the last hurdle in securing the bailout deal after India and other creditors gave early pledges.
After the IMF agreement is struck, Wickremesinghe predicted that financial support from the World Bank and the Asian Development Bank will begin to flow. But, he underlined that challenging economic changes must be implemented as agreed with the IMF and that Sri Lanka cannot afford to ignore them as it has with 16 prior accords.
“We don’t repay foreign debt at the moment, we only repay loans to the multilateral financial institutions. If we break the agreement with the IMF, we will be compelled to repay loans to foreign countries and private banks,” Wickremesinghe said. “We have approximately $6-7 billion to repay every year until 2029. We don’t have foreign currency to do that, and therefore it is imperative that the IMF keeps engaging with our creditors on the agreements reached on debt sustainability.