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China backing paves way for Sri Lanka financing: IMF

China’s agreement to restructure its loans to Sri Lanka paves the way for International Monetary Fund financing to the bankrupt island nation, the IMF said Tuesday, adding this would also speed up funding from others.

“Sri Lanka has now received financing assurances from all major bilateral creditors,” said Krishna Srinivasan, director of IMF’s Asia and Pacific Department, in a statement.

This allows the fund’s board to approve a loan earlier agreed upon by its staff.

“Approval by the board would also catalyze financing from other creditors, including the World Bank and the Asian Development Bank,” he said.

An unprecedented economic crisis has seen Sri Lanka’s 22 million people suffer acute food, fuel and medicine shortages, along with extended blackouts and runaway inflation.

President Ranil Wickremesinghe’s government has been working to repair the country’s ruined finances and secure a sorely needed IMF rescue package.

This has been held up, however, by debt negotiations with its largest bilateral creditor, China.

But Wickremesinghe said Tuesday that Beijing has agreed to a restructure. He expects the first tranche from the Washington-based lender’s promised $2.9 billion in funds to be released within the month.

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Agence France-Presse (AFP) is a French international news agency headquartered in Paris, France. Founded in 1835 as Havas, it is the world's oldest news agency.

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