“We can’t say it is China. In fact, we can’t say it is a delay because the bilateral creditors have asked for more information and clarification.” the official who also has the knowledge of the IMF negotiation told EconomyNext.
“In fact, no bilateral creditor has given any confirmation on the debt restructuring so far formally or in writing though many have said they are ready to help Sri Lanka.”
State Finance Minister Shehan Semasinghe on Wednesday said the IMF Board approval for a $2.9 billion loan is delayed beyond the earlier expected January 2023 due to a complex debt restructuring negotiations and the island nation is trying its level best to get the approval “by the first quarter of next year”.
Sri Lankan officials earlier said the country was likely to get the IMF approval for the loan before end 2022 and then said it is likely to be by January 2023.
IMF approval is required for Sri Lanka to get loans from multi-laterals and also improve its credit rating above selective default. Multilateral lenders like the World Bank and Asian Development Bank cannot give loans to a country whose debt has been deemed ‘unsustainable’ by the IMF.
Since Sri Lanka declared sovereign debt default in April this year, the island nation has stopped repaying all its bilateral creditors as it had no foreign currency and nobody was willing to help it.
The IMF has pledged to help with a $2.9 billion loan, provided Sri Lanka gets debt restructuring assurances from all its bilateral creditors and implements some long delayed reforms. (Colombo/Dec22/2022)