Issue of creditor equatability important: India on Lanka IMF loan

With the IMF announcing a loan of about $2.9 bn to Sri Lanka, India on Thursday said it has been advocating assistance to the crisis-hit country

With the IMF announcing a loan of about USD 2.9 billion to Sri Lanka, India on Thursday said it has been advocating assistance to the crisis-hit country and underlined that the issues of "creditor equitability and transparency" are important.

The IMF on Thursday announced that it will provide Sri Lanka a loan of about USD 2.9 billion over four years under a preliminary agreement to help the bankrupt island nation tide over its worst economic crisis and protect the livelihoods of the people.

Sri Lanka is going through its worst economic crisis since its independence in 1948 which was triggered by a severe paucity of foreign exchange reserves.

Asked about the development, Ministry of External Affairs Spokesperson Arindam Bagchi said, "We have seen the press release by the IMF regarding the staff-level agreement...the IMF release said the objectives include restoration of macroeconomic stability, debt sustainability, protecting the vulnerables, stepping up structural reforms."

"We also understand that this process needs to be taken forward for subsequent approvals within the IMF itself. This is still something that is an evolving situation. As you know India has been advocating assistance to Sri Lanka but let us see how it progresses. The issues of creditor equitability and transparency are important," he told reporters.

To another question on whether Sri Lanka allowing docking of a Chinese "spy ship" a provocative action, Bagchi said, "I am not sure we look at situations that way."

He said India has extended nearly USD 4 billion assistance in various forms to Sri Lanka.

"We have also made our comment on the other issues you have mentioned. Let me reiterate if there are developments that affect our security, we keep a close watch on that and take necessary measures to safeguard that. But that is a separate element to from what our relationship with Sri Lanka is," he said.

In its statement, the IMF said, "The Sri Lankan authorities and the International Monetary Fund team have reached staff-level agreement to support the authorities' economic adjustment and reform policies with a new 48-month Extended Fund Facility (EFF) with a requested access of about SDR 2.2 billion (equivalent to USD 2.9 billion)."

The new EFF arrangement will support Sri Lanka's programme to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking the country's growth potential, it said.