India, New Delhi: India extended a supporting hand to Sri Lanka and provided $4.5 billion to assist the recovery of Island country in its economic recovery on January 16 and became the first nation to issue a letter of support to IMF (International Monetary Fund) for debt and Financing reformation of Sri Lanka.
As per the reports, the External Affairs Minister, Subramanyam Jaishankar, recently landed in Colombo to meet Sri Lankan President Ranil Wickremesinghe.
He assured the political leadership of Sri Lanka that India is ready to go the extra mile for its neighbour to provide support in every term possible.
In addition, S Jaishankar met with the Sri Lankan President Wickremesinghe on behalf of Prime Minister Narendra Modi under the demonstration of the neighbourhood first policy of India on January 20.
According to the sources, the letter of support to the IMF (International Monetary Fund) was handed over on January 16, four days before the External Affairs Minister’s visit to Colombo on January 20.
During the meeting, S Jaishankar assured the President of the neighbour country that “India will stand firm with its neighbour country in this economically challenging time”.
Furthermore, India’s Finance Minister has recognized the unsustainable debt situation and engaged with creditors to restore the debt crisis. This came in the letter of support to IMF, which was addressed to Ms Kristalina Georgieva, the Managing Director of IMF.
The officials have stated that New Delhi has committed to supporting Sri Lanka in terms of providing relief with financing and debt to restore the nation’s public debt sustainability under the International Monetary Fund-supported program, which is completely financed as expected by the Bretton Woods Institution.
Moreover, the Indian Government, under the leadership of PM Narendra Modi, has stated that relief regarding the debt and financing will be provided through the Import-Export Bank of India.
It was further stated that India came forward to help the neighbour country while China was expected to provide a letter of support to IMF on Sunday.
India has become the first country to support Sri Lanka even though the current scenario in Sri Lanka is due to the airport projects along with white elephant infrastructure, which was powered by China’s high-interest loans, said officials.
The relief of financing-cum-debt provided by the Export and Import Indian Bank will be consistent in providing assistance to restore debt sustainability and restructuring the situation under the program supported by the IMF.
The Modi government has been told that the IMF’s debt sustainability assessment will be underpinned by program targets of reducing the ratio of Sri Lankan public debt to GDP to below 95% by 2032 (from 130% in 2022),
the annual gross financing needs of the Central Government are below 13% of GDP on average in the 2027-2032 period, and the Sri Lankan government’s foreign yearly currency debt service is below 4.5% of GDP every year during the above time frame. The other target is to close the external financing gap of the island nation.
India has made it clear to the IMF that Sri Lankan authorities are expected to seek equitable debt treatments from all commercial and official bilateral creditors, apart from adequate financing contributions from the multilateral development banks.
Supporting IMF efforts on the above, India has conveyed its readiness to have in-depth talks with the Sri Lankan government, IMF and the Paris Club so that debt relief and finances are finalized for the beleaguered island nation in the coming weeks.