Backing Sri Lanka, India sends financing assurances to IMF.

• Facing its worst economic crisis since independence, financing assurances from creditors is critical for Sri Lanka to get the $2.9 billion loan from IMF to put its economy on track.
• It is facing multiple challenges such as shortage of dollars, runaway inflation and a steep recession.
• India, Japan, and China are Sri Lanka’s three largest bilateral lenders.

About International Monetary Fund (IMF)

• IMF was established (in 1944) to provide emergency financing to countries hit by crises and help them to stabilize their economies.
• Unlike development banks, IMF does not lend for specific projects. It also provides precautionary financing to help prevent crises
• Crises can occur due to domestic or/and external factors and can take many different forms such as Balance of Payment issue, illiquid or insolvent financial institutions, excessive deficits and debt etc.
• Lending instruments of IMF include
  • General Resources Account on non-concessional terms (market-based interest rates).
  • Concessional financial support (currently at zero interest rates) through Poverty Reduction and Growth Trust, which is better tailored to needs of low-income countries.
  • Resilience and Sustainability Trust to help low-income and vulnerable middle-income countries.