Govt. anticipates financial assurance from China within days

• Deputy Treasury Secretary Priyantha Ratnayake insists no setback in negotiations with China
• Expresses confidence China will extend financial assurance in days to come
• Says IMF Board Meeting could be advanced despite next being scheduled for March

By Charumini de Silva

The Government is anticipating China to extend financial assurance in the coming days to go ahead with the debt restructuring program of the International Monetary Fund, a top official said yesterday.

“Discussions with China are at the final stage and we expect their assurances in the next few days,” Deputy Treasury Secretary Priyantha Ratnayake told journalists yesterday.

He insisted that there was no setback in negotiations with China, adding that it was difficult to share information about the negotiations because of the confidentiality of deliberations.

“It must be understood that these financial assurances are extended by the lender to the IMF and not to the Government of Sri Lanka. They make a bilateral commitment to support the debt restructuring process of Sri Lanka under the IMF program. The process could be anything in the course of action. The creditor countries take the risk involved in the debt restructuring process to support Sri Lanka,” Ratnayake explained.

Despite being the biggest creditor to Sri Lanka, he noted that China had no previous experience dealing with such a program and thus required extra time in the negotiations.

Noting that the original plan was for Sri Lanka to go for IMF board approval in December, he expressed confidence that following India’s commitment on Thursday, China too would extend their support in the coming days.

The visiting Indian External Affairs Minister Dr. S. Jaishankar on Thursday informed the Government that the neighbouring economic powerhouse extended financing assurances to the IMF to clear the way for Sri Lanka to move forward. 

“The next IMF Board Meeting is scheduled for March however there is the possibility that it can be advanced,» Ratnayake responded when asked for a timeline.

On 1 September 2022, Sri Lanka reached a Staff Level Agreement with the IMF to support the economic policies with a 48-month arrangement under the Extended Fund Facility (EFF) of around $ 2.9 billion.

The objectives of the new Fund-supported program are to restore macroeconomic stability and debt sustainability while safeguarding financial stability, protecting the vulnerable, and stepping up structural reforms to address corruption vulnerabilities and unlock growth potential.