Paris Club creditors give assurances to support IMF bailout for Sri Lanka

LONDON: The Paris Club of creditors has given financing assurances to support the International Monetary Fund’s approval of an extended fund facility for Sri Lanka, the Sri Lankan President’s office said on Tuesday.

The assurances are crucial to finalise a $2.9 billion bailout from the IMF, which is still pending executive board approval.

“Paris Club members as well as Hungary, Saudi Arabia and India continue to look forward to working together along with all bilateral creditors and to engage with other key stakeholders in order to proceed with a comparable debt restructuring as soon as possible,” the informal group of creditors said in a separate statement on Tuesday.

The financing assurances from the Paris Club, which includes Japan - Sri Lanka’s second-biggest bilateral lender - was previously reported by Reuters.

The island nation of 22 million secured a preliminary deal with the IMF in September, though no funds have been disbursed yet because the bailout has to be approved by the Fund’s board.

To unlock the IMF’s cash disbursements, the government first needs to secure financing assurances from key bilateral lenders such as Japan, India and China. While India committed to help ease the debt burden of its neighbour as part of the IMF programme, China’s EximBank only offered a two-year moratorium, a move that is not enough for the United States. The United States has the biggest share of IMF votes.

China and India are not in the Paris Club.

An IMF spokesperson did not immediately respond to a request for comment.

A group of overseas private creditors said on Friday that it’s also ready to hold debt restructuring talks consistent with the IMF’s programme.