India has notified its support in Sri Lanka’s debt restructuring plan although an official announcement has not yet been made.

India formally notified that it would support Sri Lanka in the country’s debt restructuring plan, said a person with knowledge about the matter. This helped the bankrupt nation in clearing a major hurdle by unlocking a $2.9 billion bailout from the International Monetary Fund.

India, Sri Lanka’s one of the major creditors, gave its nod on late Monday. Although an official announcement has not been made yet, it could be made as early as Tuesday, another person said.

Sri Lanka’s junior Finance Minister Shehan Semasinghe said by phone Tuesday, “With very positive developments taking place over the past 12 hours, Sri Lanka is confident of reaching IMF board approval in the first quarter of 2023,” when asked if India has assured support. He declined to elaborate. India’s Finance Ministry spokesperson declined to comment.

Sri Lanka still needs approval from Japan, China and so-called Paris-club members before the IMF board so that the board can approve the loan program for the country.

According to the reports, Sri Lanka concluded the debt restructuring plan with Japan, President Ranil Wickremesinghe announced last week, without sharing details. A delegation from China is visiting Sri Lanka on 18th January and Indian Foreign Minister S. Jaishankar is expected to visit from 19th January, ahead of Sri Lanka celebrating its 75 years of independence from British Rule on 14th February.

Sri Lanka fell into a deep recession last year because of the high inflation and tighter monetary policies mixed with its debt woes. Although the country has made some progress in making the economic conditions better by making basic goods like food and fuel readily available, the country is still a long way from recovery.

Read more – India’s response to Sri Lanka’s debt restructuring request to be expected by the end of January