Why in news?  India sent financing assurances to the International Monetary Fund (IMF) , becoming the first of Sri Lanka’s creditors to officially back the crisis-hit island nation’s debt restructuring programme.

Highlights

• China, Japan, and India are Sri Lanka’s three largest bilateral lenders.
• Sri Lanka requires the backing of China and India its biggest bilateral lenders  to reach a final agreement with the IMF on the $2.9 billion loan essential to help the country emerge from its worst financial crisis in seven decades.
• The financing/debt relief provided by Export-Import Bank of India will be consistent with restoring debt sustainability under the IMF-supported program

About International Monetary Fund

• It is a major financial agency of the United Nations
• Headquarters: Washington, D.C., U.S.
• Formation : Conceived at Bretton Wood conference
• Voting power : Based on a quota system.
• Plays a central role in the management of balance of payments difficulties and international financial crises.
• Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money.
• The IMF is regarded as the global lender of last resort.
• All members of the IMF are also International Bank for Reconstruction and Development
• The IMF is only one of many international organisations and it is a generalist institution that deals only with macroeconomic issues

Sources of fund

• Through quotas and loans
• The quotas are increased periodically as a means of boosting the IMF’s resources in the form of special drawing rights.

About Special drawing rights

• Supplementary foreign exchange reserve assets defined and maintained by the IMF
• They are units of account for the IMF, and not a currency
• Pegged with S. dollar, euro, Chinese yuan, Japanese yen, and pound sterling