Sri Lanka has ‘successfully’ completed debt restructuring talks with India: President Wickremesinghe

COLOMBO: Sri Lanka has “successfully” completed its debt restructuring talks with India, President Ranil Wickremesinghe said on Tuesday, days ahead of external affairs minister S. Jaishankar‘s visit to the island nation.
Sri Lanka, which is trying to secure a much-needed USD 2.9 billion bridge loan from the International Monetary Fund (IMF), has been trying to get financial assurances from its major creditors – China, Japan and India – which is the requisite for Colombo to get the bailout package.
The IMF bailout has been put on a halt as Sri Lanka pursues talks with creditors to meet the global lender’s condition for the facility.
“I can tell this assembly that the talks are successful. Very soon we will have an answer,” President Wickremesinghe said in Parliament.
Jaishankar will arrive in Sri Lanka on January 19 on a two-day official visit, when he will visit the country’s top leadership.
Last week, Sri Lanka completed its debt restructuring talks with Japan and President Wickremesinghe has also held talks with China’s Exim Bank.
Extending a much-needed lifeline to a neighbour in need, India has handed financial assistance of nearly USD 4 billion to Colombo last year.
In January 2022, India announced a USD 900 million loan to Sri Lanka to build up its depleted foreign reserves as the financial crisis began to unfold.
Later, it offered a USD 500 million credit line to Sri Lanka to fund the country’s fuel purchases.
The credit line was later expanded to USD 700 million due to the sheer gravity of the situation.
The Indian credit lines since early 2022 have been in use to import essentials and fuel after street protests erupted due to severe shortages of essentials.
Sri Lanka began debt restructuring talks with its creditors in September last year as warranted by its agreement with the IMF for the USD 2.9 billion facility over four years.
It began negotiating with the IMF for a bail-out after having announced its first-ever sovereign debt default in April last year.
The IMF facility would enable the island nation to obtain bridging finance from markets and other lending institutions such as the ADB and the World Bank.
Sri Lanka was hit by an unprecedented financial crisis in 2022, the worst since its independence from Britain in 1948, due to a severe paucity of foreign exchange reserves, sparking political turmoil in the country which led to the ouster of the all-powerful Rajapaksa family.

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