China supports Sri Lanka’s IMF deal, AIIB agrees to give US$160mn


China’s has said it will support Sri Lanka in its negotiation with the International Monetary Fund, and the Asian Infrastructure Investment Bank has indicted its willingness to lend 160 million US dollars, Finance Minister Ali Sabry said.

China’s Ambassador had earlier said that they were unhappy with the decision to go the IMF and default on debt.

“I talked with him,” Minister Sabry said. “And he said they would support and China was an IMF member. I think that is a victory.”

China’s AIIB had indicated willingness to lend 160 million US dollars to Sri Lanka he said.

Sri Lanka was also in talks with friendly countries to get about 3 to 4 billion US dollars in bridge financing for the next few months.

Sri Lanka had to go the IMF and default on its debt after several years of output gap targeting (printing money for stimulus), triggered three currency crises in seven years leading to a ratcheting up of bonds debt and eventual downgrades.