(Reuters) – India has pledged to help reduce the debt burden of its crisis-struck neighbor Sri Lanka as part of a possible IMF-backed program, the International Monetary Fund said on Monday.
The island nation of 22 million people has struggled over the past year with challenges ranging from foreign exchange shortages to runaway inflation and severe economic Recession – worst crisis since 1948 Independence from Great Britain.
Reuters reported last week that India has told the IMF that it strongly supports Sri Lanka’s debt restructuring plan as the island seeks a $2.9 billion loan People said in a statement on Monday, according to a letter from Global Bank.
“Sri Lanka is approaching other official bilateral creditors to obtain similar assurances”.
“Once sufficient assurances are obtained and remaining requirements are met, including assurances from the Sri Lankan authorities, the Sri Lanka Fund-supported program may be proposed to the IMF Executive Board Apply for approval to free up much-needed financing.”
Sri Lanka needs support from China and India – its largest bilateral lenders – to reach a crucial deal with the IMF The final deal helped the country emerge from its worst financial crisis in seven decades.