China Pledges Support for Sri Lanka in Face of IMF Review and Debt-Related Challenges
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In anticipation of the International Monetary Fund’s (IMF) first review of Sri Lanka’s economic situation, China has stepped forward to pledge its support in addressing the country’s debt-related challenges. The inaugural assessment of the $2.9 billion bailout granted to Sri Lanka in March of this year by the International Monetary Fund is scheduled to take place from September 11 to September 19.
China, being one of Sri Lanka’s primary bilateral lenders, has vowed to assist the Sri Lankan government in finding effective solutions to its debt-related difficulties. A key task ahead for Sri Lanka is the restructuring of its international and local debts, which together amount to a staggering $41 billion. This restructuring needs to be accomplished by September, ahead of the IMF’s initial assessment.
Scheduled between September 11 and 19, the International Monetary Fund (IMF) will conduct its inaugural assessment of the $2.9 billion bailout, which was granted in March of this year. The Sri Lankan Prime Minister’s Office disclosed that discussions were held during the seventh China-South Asian Expo between Wang Yi, China’s Foreign Minister and Director of the Office of the Foreign Affairs Commission of the ruling Communist Party of China (CPC) Central Committee, and Sri Lankan Prime Minister Dinesh Gunawardena.
During this meeting, Wang Yi assured Sri Lanka of China’s commitment to effectively tackle the nation’s debt-related challenges. Emphasizing the strong and enduring strategic partnership between the two nations, Wang Yi acknowledged Sri Lanka’s consistent and amicable stance towards China. He also noted the unwavering support Sri Lanka has provided on matters concerning China’s core interests.
Sri Lanka is currently engaged with its foreign lenders to meet the International Monetary Fund’s (IMF) requirements for its appraisal following the granting of a $2.9 billion bailout in March. This assessment will take place over the next four years.
The IMF has previously announced its upcoming visit to Colombo for this examination, which will occur between September 14 and September 27. Sri Lanka must reach agreements with all of its foreign creditors about the complete debt restructuring plans for the massive $41 billion debt burden within the next month.
Last year, the island country experienced its most severe economic crisis to date, marked by a steep decline in foreign exchange reserves and public demonstrations in response to the shortage of essential commodities, fuel, and fertilizers.
During this crisis, Indian credit lines and other financial mechanisms totaling more than $4 billion played a critical role in allowing the country to weather the storm, even as demonstrations erupted in reaction to shortages of crucial supplies and energy.
-Yusra Chand
Team Profile
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