US backs Sri Lanka for IMF aid, urges China to do more

Colombo, Feb 1 (EFE).- The United States’ Undersecretary of State for Political Affairs, Victoria Nuland, on Wednesday pledged Washington’s support in the ongoing negotiations between Sri Lanka and the International Monetary Fund for a crucial bailout package that the island has been negotiating for months.

“We the United States are prepared to do our part. Paris Club Partners are prepared to do their part,” Nuland said, referring to a group of major creditor countries.

The US official was speaking in a press conference in Colombo as part of her official Sri Lanka visit.

Sri Lanka, facing the worst economic crisis in its history and out of funds for paying its debts, has been hoping for a credit line worth $2.9 billion from the IMF, with the negotiations stretching on for months pending final approval by the financial body’s board.

“We want to see an IMF agreement as quickly as possible. That’s what Sri Lanka deserves. That’s what Sri Lanka needs,” the US undersecretary stressed.

Although the aid package has already been approved at the technical level, the final approval by the board and the release of the funds has been stuck as IMF has been waiting for the implementation of sustainable policies by the Sri Lankan government, third party guarantees and creditors’ assurances.

The process includes the participation of India, a US ally and one of the most powerful economies of the region, which has expressed its willingness to stand guarantee before the IMF.

China is another key player of the process, as Sri Lanka owes billions in debt to Chinese creditors and has defaulted on payments once its foreign currency reserves dried up.

Although last week Beijing offered a two-year moratorium on Sri Lanka’s debt payments to help its credit request, Nuland said on Wednesday that this was not enough.

“We need to see credible and specific assurances that they will meet the IMF standard of debt relief,” the official insisted.

Nuland arrived in Sri Lanka on Wednesday to mark 75 years of diplomatic ties between the two countries, with the visit offering much-needed support to President Ranil Wickremesinghe’s government amid the crisis.

The Sri Lankan government admitted on Tuesday that so far the revenue generation this year had been far below the expenditure in the country, and urged the cabinet to enforce more spending cuts, avoid credits and prioritize salaries

The economic crisis resulted in a social revolt in 2022, with thousands coming out on the streets to protest and eventually forcing the ouster of former president Gotabaya Rajapaksa’s government. EFE


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