India commits to help Sri Lanka on debt in prospective IMF programme

Sri Lanka requires the backing of China and India to reach a final agreement with the IMF that is essential to help the country emerge from its worst financial crisis

India has committed to help ease the debt burden of its crisis-stricken neighbor Sri Lanka as part of a possible International Monetary Fund-supported program, the IMF said on Monday.

The island nation of 22 million people has grappled with challenges during the past year ranging from a shortage of foreign currency to runaway inflation and a steep recession - the worst such crisis since independence from Britain in 1948.

India had told the IMF it strongly supports Sri Lanka's debt restructuring plan as the island seeks a $2.9 billion loan from the global lender, according to a letter.

"Sri Lanka is engaged with other official bilateral creditors to obtain similar assurances," an IMF spokesperson said in a statement on Monday.

"As soon as adequate assurances are obtained and remaining requirements are met, including by the Sri Lankan authorities, a Fund-supported program for Sri Lanka can be presented to the IMF's Executive Board for approval that would unlock much needed financing."

Sri Lanka requires the backing of China and India - its biggest bilateral lenders - to reach a final agreement with the IMF that is essential to help the country emerge from its worst financial crisis in seven decades.