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Ready to finalize specifics of Sri Lanka’s debt relief in coming weeks, India tells IMF

India is looking for a medium-to-long-term debt treatment through maturity extension and interest rate reduction or any other financial operation that would deliver similar financing or debt relief to Sri Lanka, an Indian official said.

Confirming India’s strong support for Sri Lanka’s prospective EFF-supported program, the Additional Secretary of India’s Finance Ministry, Rajat Kumar Mishra, in a letter to IMF Managing Director Kristalina Georgieva said that this debt relief will be provided by the Export-Import Bank of India.

“The financing/debt relief provided by the Export-Import Bank of India will be consistent with restoring debt sustainability under the IMF-supported program,” he said.

IMF’s debt sustainability assessment will be underpinned by the program targets of (i) reducing the ratio of public debt to GDP to below 95 percent by 2032, the central government’s annual gross financing needs below 13 percent of GDP on average in 2027-32, and the central government’s annual foreign currency debt service below 4.5 percent of GDP in every year in 2027-32; and (ii) closing Sri Lanka’s external financing gap.

“We would like to stress that the Sri Lankan authorities are expected to seek equitable debt treatment from all commercial creditors and other official bilateral creditors, as well as adequate financing contributions from the multilateral development banks.”

He added that they are looking forward to continuing cordial and in-depth discussions with the Sri Lankan authorities, IMF, and the Paris Club with a view to finalizing the specifics of this financing/debt relief in the coming weeks.

Meanwhile, India’s External Affairs Minister Dr. S. Jaishankar is scheduled to have official discussions with President Ranil Wickremesinghe, Prime Minister Dinesh Gunawardena, Foreign Minister Ali Sabry, and other dignitaries during his official visit to Sri Lanka.

External Affairs Minister Dr. S. Jaishankar will be accompanied by Joint Secretary (IOR) Puneet Agrawal, Director Sandeep Kumar Bayyappu, Deputy Secretary (Sri Lanka) Nidhi Choudhary and Deputy Secretary Raghoo Puri from the Ministry of External Affairs, India.

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