India wrote to the IMF earlier this month, saying it would commit to supporting Sri Lanka with financing and debt relief, but the island nation also needs the backing of China in order to reach a final agreement with the global lender.
At the end of 2020, China EximBank had loaned Sri Lanka $2.83 billion which is 3.5% of the island’s debt, according to an IMF report released in March last year. Sri Lanka owed Chinese lenders $7.4 billion, or nearly a fifth of its public external debt, by the end of last year, calculations by the China Africa Research Initiative showed.
“China was expected to do more,” the source said, “This is much less than what is required and expected of them.”In a letter directly addressed to the IMF, India said last week that the financing or debt relief provided by Export-Import Bank of India would be consistent with restoring debt sustainability under the IMF-supported program.