Courtesy Adaderana

The Paris Club of creditor nations is ready to provide financing assurances to Sri Lanka, a key step needed to unlock a $2.9 billion International Monetary Fund bailout, two sources with direct knowledge of the matter told Reuters.

The group of bilateral lenders is set to soon” announce its support to the crisis-hit nation on a debt overhaul, said one of the people, who asked not to be named because talks are private.

Sri Lanka entered into a staff level agreement with the International Monetary Fund (IMF) last September, but needs financing assurances from key bilateral lenders before the fund’s executive board approves the programme.

China and India, both not permanent Paris Club members, are top bilateral lenders to the crisis-hit country.

India previously committed to help ease the debt burden of neighbour Sri Lanka as part of the IMF programme, while China’s Eximbank offered a two-year moratorium in a letter sent to the island nation in January.

While the IMF has not yet provided any guidance on where the lender stands regarding China’s assurances to Sri Lanka, a U.S. official visiting Colombo said on Wednesday that Beijing has not done enough.

What China has offered so far is not enough. We need to see credible and specific assurances that they will meet the IMF standard of debt relief,” U.S. Under Secretary of State for Political Affairs Victoria Nuland told reporters. The U.S. is the largest IMF member.

Source: Reuters