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India leads in backing Sri Lanka’s case for IMF funds

Sri Lankan President India’s Foreign Minister S. Jaishankar with Sri Lankan President Ranil Wickremesinghe

As part of its Neighbours-First policy, India has taken the lead in backing Sri Lanka’s request for finance and debt restructuring from the International Monetary Fund.

While China is expected to hand over its letter of support to IMF on Sunday, New Delhi handed over its support letter to IMF on January 16, four days ahead of External Affairs Minister S Jaishankar’s visit to Colombo.

Jaishankar assured the Sri Lankan leaders including President Ranil Wickremesinghe that India stands with the island nation in its hour of crisis and is ready to go the extra mile if required.

The minister said his visit to Sri Lanka was a demonstration of Prime Minister Narendra Modi’s neighborhood-first policy.

India has been standing firmly with Sri Lanka during the economic crisis even though Colombo has been allowing access to China’s navy ships at its ports despite New Delhi’s reservations on the issue.

In the letter of support to IMF,  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.

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

In its letter to IMF, India has conveyed that it is committed to continuing negotiations with the Sri Lankan government along with the Paris Club on a medium- to long-term debt restructuring through maturity extension and interest rate reduction or any other financial instrument that can deliver similar debt relief.