Foreign media have reported that the International Monetary Fund is considering approving loans for Sri Lanka even without a formal guarantee of debt restructuring assistance from China, Sri Lanka’s largest bilateral creditor.
It is stated that the International Monetary Fund has decided to consider approving loans to Sri Lanka even without China’s credit guarantee under the rarely used policy of lending to official arrears.
This provision is aimed at preventing the creditor from blocking aid to a country in dire financial need and has demonstrated commitment to meet the terms of the loan.
This decision was taken after World Bank President David Malpass said last Thursday that the G-20 countries and other countries should include long credit extensions among the options being considered to ease the debt burden of poor countries.
The IMF, the World Bank and the Group of 20 India have held talks on global sovereign debt separately ahead of next week’s meeting of finance ministers and central bank governors in Bangalore.
Sri Lanka and Pakistan are relying on IMF loans to provide immediate relief by boosting their foreign currency reserves and opening more funds.
While the Paris Club and India have formally supported Sri Lanka’s debt restructuring, it is said that only China has not given official confirmation so far. (Neth News)
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