India agrees to help crisis-hit Sri Lanka in potential IMF program

• India told the IMF it firmly supports Sri Lanka’s debt restructuring plan.
• Sri Lanka is seeking a $2.9 billion loan from an international lender.
• The 22 million-strong island nation has faced difficulties in recent months.

As part of a potential initiative funded by the International Monetary Fund, India has agreed to assist in reducing the debt burden of Sri Lanka, the IMF announced on Monday.

The 22 million-strong island nation has faced difficulties in recent months, including a lack of foreign money, rogue inflation, and a severe recession – the worst such crisis since independence from Britain in 1948.

India told the IMF it firmly supports Sri Lanka’s debt restructuring plan as the island seeks a $2.9 billion loan from the international lender, the international media reported last week.

“Sri Lanka is engaged with other official bilateral creditors to obtain similar assurances,” an IMF spokesperson said in a statement on Monday.

“As soon as adequate assurances are obtained and remaining requirements are met, including by the Sri Lankan authorities, a Fund-supported program for Sri Lanka can be presented to the IMF’s Executive Board for approval that would unlock much-needed financing.”

For Sri Lanka to secure a final agreement with the IMF, which is necessary to assist the country in emerging from its worst financial crisis in seven decades, it needs the support of China and India, its two largest bilateral lenders.

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