Sri Lanka awaiting assurances from India, China, says Central Bank Governor

Sri Lanka is waiting for financing assurances from its bilateral creditors, including India and China, to tap support from the International Monetary Fund (IMF), Sri Lanka’s Central Bank Governor P. Nandalal Weerasinghe has told The Hindu in an interview.

Over the past few months, Sri Lanka has been in talks with China, Japan, and India — its three major bilateral creditors — to restructure the billions of dollars owed to them. “We have shared all the information possible with our bilateral creditors, on an open, comparable, and transparent basis. Now they will have to look at it, make their decisions internally and come back to us … we hope they will do that soon,” the Governor of the apex Bank told The Hindu.

Although Sri Lanka aimed to secure IMF relief before the end of this year it failed to, as bilateral negotiations dragged. Talks with China got a “little delayed”, Governor Weerasinghe observed, citing “internal issues” such as the Chinese Communist Party (CCP)’s national congress held in October, and “COVID-19 restrictions” in China.

But the delay in discussions with China “is not the only reason” for Sri Lanka’s inability to secure the IMF package this year, in his view. Japan, and the Paris Club of which it is a member, “know this business” [of debt restructure] as they have “been doing it for many years”, he said. “Because of that, they are more advanced in their engagement. They have done the analysis and shared it with non-Paris Club members like India and China,” Weerasinghe said, adding: “Now, it is up to them.” After the creditors provide financing assurances, it would likely take the IMF Board four to six weeks to approve the package, he said.