Sri Lanka expects final approval from the International Monetary Fund for a $2.9 billion loan in the third or fourth week of this month, the president said on Tuesday, adding that new support from China means all funding requirements had been met.
The country's international debt and currency roared higher on the news, with bonds adding nearly 3 cents in the dollar while the rupee jumped nearly 8% to a 10-month high.
China and India are Sri Lanka's biggest lenders. By end-2020, Sri Lanka owed the Export-Import Bank of China $2.83 billion or 3.5% of the island's external debt, according to IMF data.In total, Sri Lanka owed Chinese lenders $7.4 billion, or nearly a fifth of public external debt, by end-2022, calculations by the China Africa Research Initiative showed.
"There is a lot of positivity around a possible IMF announcement and more dollar loans are expected with an approval of the bailout," said Udeeshan Jonas, chief strategist at equity research firm CAL Research. Sri Lanka needs to repay about $6 billion on average each year until 2029 and will have to keep engaging with the IMF, Wickremesinghe said.
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