Bankrupt Sri Lanka enters new year with no clarity on bailout

It is close to missing its self-imposed deadline of end-December to conclude negotiations with creditors that will unlock an IMF bailout

With an IMF bailout in limbo, more than 22 million citizens in Sri Lanka are stuck with an economy that is in a tailspin. PHOTO: AFP
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BENGALURU – Sri Lanka will hobble into 2023 with old problems it had hoped not to carry over into the new year. The bankrupt country is nearing its deadline of end-December to get the bilateral approvals necessary for a bailout from the International Monetary Fund (IMF), with little good news.

China, its biggest creditor, is holding out. The Asian country holds the biggest chunk of Sri Lanka’s external debt (19.6 per cent), followed by Japan (9 per cent) and India (2 per cent). Sri Lanka’s central bank governor Nandalal Weerasinghe told local media last week that negotiations with Beijing had gone slower than expected, mostly due to internal factors like China’s then zero-Covid policy. Sri Lanka hopes to get its creditor countries to agree to restructure their loans to the island, only after which the IMF will begin processing its bailout application.

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