[2] Notwithstanding the receipt of substantial soft loans from China, the island nation of Sri Lanka finds itself ensnared in a foreign currency crisis, prompting concerns among experts that it may be driven towards default.

The current year places a heavy burden on Sri Lanka, with debt repayments amounting to approximately $4.5 billion, commencing with an initial payment of $500 million towards an international sovereign bond.

[8] As per the IMF's statement, India has firmly pledged its commitment to aiding its distressed neighbor, Sri Lanka, in reducing its debt burden through a potential International Monetary Fund-backed initiative.

The successful resolution with the IMF holds utmost importance for Sri Lanka's journey to recover from its most severe financial crisis in the past seventy years, highlighting the crucial role played by India's support.

[9] Amidst the country's current foreign exchange crisis, former Sri Lankan President Gotabaya Rajapaksa sought a $3 Billion loan from the IMF in April 2022.

[13] Washington Post columnist Ishaan Tharoor argues that the decision of the Rajapaksa government to accept a $3 billion line of credit from China to facilitate repayment of existing debts was an important factor in the development of the current crisis.

The consultation warned of a rising current account deficit, referring to Sri Lanka's foreign exchange reserve levels as "critically low".

Additionally, executive directors stressed the importance of long-term structural adjustments to increase female labor force participation, reduce youth unemployment, diversify the economy, and fight corruption.