With China yet to support Sri Lanka debt restructuring based on the financial obligation sustainability analysis (DSA) of the IMF and Paris Club, time is abandoning Colombo to protect a much-needed loan to revive the nation from today recession.

Sri Lanka is looking for a USD 2.9 billion-dollar loan from the IMF over 4 years in 8 installments.While India has accepted support the Island country on the basis of DSA, China still has differences over duration of loan moratorium and financial obligation restructuring with the IMFs Executive Board scheduled to fulfill next month.

Under the circumstances, the IMF can either provide loan on arrears and then wait on China to come on board by IMF spring meeting or later this year.

Sri Lanka owes almost USD 7.8 billion dollars to China that includes both bilateral financing from EXIM bank and business financing from Chinese development Bank.

Throughout the years, the Rajapaksas with present President Ranil Wickremesinghe in cahoots, used these loans for sponsoring white elephant projects like Hambantota port, Mattala airport, Norocholai power plant and Colombo port city as a result of which Beijing was offered long term tax concessions and a totally free run of the Island nation.While China was the favourite destination of the Sri Lankan political leadership considering that today millennium, Colombo picked to stay away from India under pressure from Beijing and has still not stated yes to the Indian proposition to develop the Trincomalee port.

It is another matter that India offered some 4 billion dollars worth of aid including food, fuel and medication, to Sri Lanka in 2015 to tide over its raging economic crisis.With Chinese EXIM bank only ready to extend a 2 year debt moratorium to Colombo currently, the Sri Lankan economy will hit the rock bottom quickly or else IMF will have to offer loan on defaults with additional rigid conditions.

This not just means additional political instability in the Island country and the apparent recipient of this ferment will be the Communist parties of Sri Lanka like the JVP.The political climate of Sri Lanka will stay unsure however the very first indicator of the degree of ferment will be the local elections next month.

Unless the mainstream celebrations are able to recover from the hit, President Wickremesinghe, who is the lone MP from his party, might not aspire to reveal the general elections.

With USD at an all-time high against Sri Lankan rupee and food inflation into double digits, things will get much worse for Sri Lanka prior to they turn for the much better.

And this could take at least a decade.Source - Hindustan Times . - Agencies