China is expected to hand over its letter of support towards the financing and debt restructuring of Sri Lanka to the International Monetary Fund (IMF) today (22 Jan.)., the Hindustan Times reported.

This comes in the aftermath of India’s financial assurances to Sri Lanka.

On Monday (16 Jan.), India told the IMF that it strongly supports Sri Lanka’s debt restructuring plan as the island nation seeks a $2.9 billion loan from the global lender.

“We hereby confirm our strong support for Sri Lanka’s prospective (loan) program and commit to supporting Sri Lanka with financing/debt relief consistent with restoring Sri Lanka’s public debt sustainability,” Indian finance ministry official Rajat Kumar Mishra told the IMF chief.

In the letter of support to IMF, addressed to IMF Managing Director Ms. Kristalina Georgieva, India’s finance ministry acknowledged Sri Lanka’s deeply unsustainable debt situation, the country’s engagement with creditors to restore debt sustainability, and confirmed its strong support to Colombo’s prospective extended finance facility supported program. 

New Delhi has made it clear that it is committed to supporting Sri Lanka with financing/debt relief consistent with restoring that country’s public debt sustainability under the IMF supported program and ensuring that the program is fully financed as projected by the Bretton Woods Institution. 

The Modi government has conveyed that this financing/debt relief will be provided by the Export Import Bank of India.

Meanwhile, during his most recent official visit to Sri Lanka, Indian External Affairs Minister Dr. S. Jaishankar also assured that the Indian government will provide all possible support to solve the current economic problems faced by Sri Lanka.

“India decided not to wait on others but to do what we believe is right. We extended financing assurances to the IMF to clear the way for Sri Lanka to move forward”, Jaishankar said, adding that India is hopeful that this will not only strengthen Sri Lanka’s position but ensure that all bilateral creditors are dealt with equally.

Speaking on securing financial assurance from China, the island’s largest bilateral lender, Deputy Treasury Secretary Priyantha Ratnayake told Reuters on Friday (20 Jan.) that discussion with China are in the final stage.

“It is difficult to give details of the debt restructuring negotiations because of the confidentially of discussions,” he said, adding that: “However, we can say that discussions with China are at the final stage and we expect their assurances in the next few days.”

- With input from agencies