China has not done enough on Sri Lanka debt restructuring – U.S. diplomat

By Uditha Jayasinghe

COLOMBO (Reuters) – The United States wants China to provide credible and specific assurances to the International Monetary Fund (IMF) along with other creditors to help Sri Lanka unlock a $2.9 billion bailout, a senior U.S. diplomat said on Wednesday.

Sri Lanka entered into a staff level agreement with the global lender last September but needs financing assurances from key bilateral lenders China and Japan before disbursements can begin.

India, the third significant lender, dispatched its financing assurances to the IMF last month.

“What China has offered so far is not enough. We need to see credible and specific assurances that they will meet the IMF standard of debt relief,” U.S. Under Secretary of State for Political Affairs Victoria Nuland told reporters.

“We, the United States, are prepared to do our part. Our Paris Club partners are prepared to do their part. India has made strong commitments that it will provide the credible assurances the IMF is looking for.”

The Export-Import Bank of China has offered Sri Lanka a two-year moratorium on its debt and said it would support the country’s efforts to secure an IMF program.

Sri Lanka, an island of 22 million people, is caught in its worst financial crisis since independence from Britain in 1948, with soaring inflation, a recession and currency depreciation over the last year.

“We want to see an IMF program as quickly as possible. That is what Sri Lanka deserves, that is what Sri Lanka needs,” Nuland added.

(Reporting by Devjyot Ghoshal; Editing by Andrew Heavens and Christina Fincher)