The International Monetary Fund (IMF) approved a nearly $3 billion bailout for Sri Lanka after obtaining specific and credible financing assurances from major official bilateral creditors.

The assurances were obtained from the Export-Import Bank of China, Paris Club creditors, India and Hungary, according to an IMF statement.

Consent to IMF financing, notwithstanding Sri Lanka’s arrears, was received from the remaining Chinese official bilateral creditors, Iran, Kuwait, Pakistan and Saudi Arabia.

“This demonstrated the support and determination by all of Sri Lanka’s official bilateral creditors,” the fund said.

The IMF said it will immediately disburse an initial $333 million to Sri Lanka, with more funds to follow in the coming months.

In January 2023, Reuters reported that the Export-Import Bank of China had offered Sri Lanka a two-year moratorium on its debt, assuring its support to secure a loan from the IMF. 

Later in March, the news agency reported that the Chinese Exim bank informed Sri Lanka that it would try to finalise how it treats debt owed by the crisis-hit nation in the months ahead, reiterating a moratorium for debt due in 2022 and 2023.

Sri Lanka sought relief from the Washington-based lender of last resort shortly before defaulting on its $46 billion foreign debt in April 2022.

(Writing by P Deol; Editing by Anoop Menon)