New Delhi: The International Monetary Fund (IMF) finally approved the crisis-hit Sri Lanka's bailout on Tuesday as it announced that the IMF Executive Board approved Sri Lanka’s program under the Extended Fund Facility (EFF). The program will allow Sri Lanka to access financing of up to US$ 7 billion from the IMF, International Financial Institutions (IFIs), and multilateral organizations.
The IMF has also thanked India for considering Sri Lanka’s request for a loan. It is pertinent to note that New Delhi has been influential in assuring the restructuring of the debt of Sri Lanka to unlock the way to the financial package from IMF.
Reacting to the development, ex-diplomat G. Parthasarathy told ETV Bharat that India has pushed and lent a helping hand in persuading the US and the others. "When I was in Sri Lanka two weeks ago, it was clear that they were expecting the clearance from IMF," he said, further noting that China has done nothing except give a token amount, which means little, he said.
"They have not redeemed their debt and more importantly, China is in the position of the Hambantota port. China has taken control of a port but it has given very little," the ex-diplomat said.
When asked if Sri Lanka is tilting towards China which might impact its ties with India in the geopolitical context, Parthasarathy pointed out that India's position is very clear that it is fine if China wants to improve ties with Sri Lanka, "but if it has a security or a defense content -- which we feel is a matter of concern for us -- then India will take up strongly". "The fact is that when India has been pouring money in Sri Lanka, China is still in possession of the Hambantota port", he added.
Earlier this month, Sri Lanka received IMF-compatible financing assurances from its official creditors, including Paris Club members, India and China, allowing the IMF to convene an Executive Board and consider Sri Lanka’s request for a loan. The program is expected to provide much-needed policy space to drive the economy out of the unprecedented challenges and instill confidence amongst all the stakeholders.
Welcoming the announcement, President Ranil Wickremesinghe said, "In the 75 years of Sri Lanka’s independence, there has never been a more critical period for our economic future. Our official creditors have declared their support following continuous and positive engagements over the last few months, and we are pleased that the IMF Executive Board approved our program, enabling Sri Lanka to access up to US$ 7 billion in funding from the IMF and IFIs".
"From the very start, we committed to full transparency in all our discussions with financial institutions and with our creditors. I express my gratitude to the IMF and our international partners for their support as we look to get the economy back on track for the long term through prudent fiscal management and our ambitious reform agenda", Wickremesinghe said.
He underlined that the IMF program will also be imperative to improving Sri Lanka’s standing in and access to international capital markets, and it will demonstrate that Sri Lanka is once again a country attractive to talent, investors, and tourists.
Sri Lanka reached a Staff-Level Agreement with the IMF on a four-year program supported by the Extended Fund Facility on 1st September 2022. The program, amounting to US$ 3bn, is expected to restore macroeconomic stability and debt sustainability while protecting vulnerable groups and safeguarding Sri Lanka’s financial system
