Paris Club provides financing assurances to support IMF bailout for Sri Lanka

The Paris Club of creditor nations have provided the required financing assurances to support the International Monetary Fund’s (IMF) approval for the Extended Fund Facility (EFF) for Sri Lanka, the President’s Media Division (PMD) reported.

The PMD reported that the Paris Club members expressed their commitment to negotiate debt restructuring with Sri Lanka in accordance with the comparability of treatment principle and with the goal of restoring debt sustainability. 

Saudi Arabia and India also expressed their support and commitment to providing financing assurances, it said. 

The Paris Club members urged other official bilateral creditors, including China, to do the same in line with the IMF program parameters, the PMD said.

The assurances are crucial to finalise the $2.9 billion bailout from the IMF.

Last week, Reuters, quoting unnamed sources, stated that the Paris Club of creditor nations is ready to provide financing assurances to Sri Lanka, a key step needed to unlock a $2.9 billion International Monetary Fund bailout.

Sri Lanka entered into a staff level agreement with the International Monetary Fund (IMF) last September, but needs financing assurances from key bilateral lenders before the fund’s executive board approves the programme.

China and India, both not permanent Paris Club members, are top bilateral lenders to the crisis-hit country.

India previously committed to help ease the debt burden of neighbour Sri Lanka as part of the IMF programme, while China’s Eximbank offered a two-year moratorium in a letter sent to the island nation in January.

While the IMF has not yet provided any guidance on where the lender stands regarding China’s assurances to Sri Lanka, a U.S. official visiting Colombo said on Wednesday that Beijing has not done enough.

Attached is the relevant statement issued by the Paris Club of creditor nations;