China's silence over Sri Lanka's debt restructuring slow down IMF bailout discussion

Colombo, Sept 13: Sri Lanka has reached an agreement with the International Monetary Funds (IMF) regarding debt restructuring which will start only after all Sri Lankan creditors agree to restructure their existing loans to the island nation. On the other hand, while China keeps mum over the issue, IMF bailout discussions still remain at the staff level of agreement.

 

 

 

 

All Sri Lankan creditors including China have to agree to restructure their existing loans to the island nation before the IMF starts disbursing a USD 2.9 billion loan, but China's silence on the issue and IMF bailout discussions still remain at the staff level of agreement. Sri Lanka has agreed to a USD 2.9 billion deal with IMF officials, but cash will not flow to Colombo until significant progress is made on debt restructuring with China, Japan and India mainly.

 

 

 

 

 

 

The IMF staff and the Sri Lankan authorities have reached a staff-level agreement to support Sri Lanka's economic policies with a 48-month arrangement under the Extended Fund Facility (EFF) of about USD 2.9 billion. The new EFF arrangement will support Sri Lanka's program to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka's growth potential.

 

 

One of the conditions was also to reduce corruption vulnerabilities through improving fiscal transparency and public financial management, introducing a stronger anti-corruption legal framework, and conducting an in-depth governance diagnostic, supported by IMF technical assistance. China has so far not agreed for debt restructuring which could include reductions in interest rates. Instead, China has expressed its willingness to refinance Sri Lanka to repay its past loans without any changes, said Lankan officials.