"China backs Sri Lanka debt plan paving way for IMF loan; to do same for Ghana?"

" China backs Sri Lanka debt plan paving way for IMF loan; to do same for Ghana? \r\n\r\nChina has given assurances that it will support Sri Lanka\u2019s debt restructuring, clearing the biggest hurdle for the South Asian nation to secure a $2.9 billion bailout from the International Monetary Fund.\r\n\r\nSri Lanka\u2019s largest bilateral creditor gave written support for the debt restructuring via the Export-Import Bank of China on March 6, according to people familiar with the situation, who asked not to be identified as the information isn\u2019t public. The letter meets the requirements of the IMF, the people said.\r\n\r\nJust like Sri Lanka, Ghana is also hoping that China will support its external debt restructuring programme in a bid to secure a $3bn IMF bailout\u00a0by the end of March as the country seeks to restructure its $1.9 billion indebtedness to China.\r\n\r\nGhana is seeking several reliefs from China, including an extension of the moratorium on debt servicing, an extension of maturities, and lower interest rates.\r\n\r\nAccording to a statement by Ghana's Ministry of Finance, discussions between both countries have been highly cordial and fruitful, and the two governments have exchanged data on the parameters of an effective debt treatment.\r\n\r\nChina\u2019s backing completes the support Sri Lanka needs from creditor nations to allow the IMF board to approve the loan that was agreed upon by the Fund staff in September. Sri Lanka had anticipated the board\u2019s nod by the end of 2022 although it has since adjusted expectations to within this quarter.\r\n\r\nThe bailout will pave the way for more funding and set the bankrupt nation\u2019s debt restructuring on a steadier path since last year\u2019s default. While paralyzing supply shortages in the island nation have eased, foreign currency reserves have been inching up and inflation somewhat cooling, the nation needs the IMF loan to get more funding and turn the corner.\r\n\r\nIMF financial support can only be provided for countries with sustainable debt. For countries with unsustainable debt, IMF financing may proceed before a debt restructuring is completed if official bilateral creditors provide the IMF with adequate assurances that they will take steps to help restore debt sustainability.\r\n\r\nIn the past months, Sri Lanka has increased taxes, cut energy subsidies and loosened its grip on the currency to secure the IMF loan. Authorities recently boosted borrowing costs further to ensure that inflation which has come off nearly 70% doesn\u2019t flare up while loosening grip on the currency to strengthen market confidence.\r\n\r\nChina accounts for 52% of the nation\u2019s bilateral debt. India and the Paris Club of creditors have previously given their support to the debt restructuring that\u2019s dragged since Sri Lanka defaulted in May last year.\r\n\r\nThe troubled economy seeks to turn the corner after the bailout, expecting inflation to ease to single-digit levels by the end of 2023 as tourism and remittances pick up."

"China backs Sri Lanka debt plan paving way for IMF loan; to do same for Ghana?"

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