Relieved Colombo’s short-term debt repayment pressure: China
Beijing: China today claimed it already helped relieve Sri Lanka’s short-term debt repayment pressure. Beijing was responding to Sri Lanka’s central bank governor’s recent statement to Bloomberg that he expected China to support the country’s effort to restructure debt.
Chinese foreign ministry spokesperson Wang Wenbin said that the Export-Import Bank of China, as the official bilateral creditor, stated clearly in its financing support documents to the Sri Lankan finance ministry that the Bank was going to provide an extension on the debt service due in 2022 and 2023, “which means Sri Lanka will not have to repay the principal and interest due of the Bank’s loans during the above-mentioned period, so as to help relieve Sri Lanka’s short-term debt repayment pressure”.
Wenbin said, the Bank would “like to have friendly consultation” with Sri Lanka regarding medium- and long-term debt treatment in this window period.
“The Bank will make its best efforts to contribute to the debt sustainability of Sri Lanka,” Wenbin assured and said Beijing has called on commercial and multilateral creditors to take part in Sri Lanka’s debt restructuring based on fair burden-sharing.
“I would also like to reiterate that we continue to support Chinese financial institutions in actively working out the debt treatment. We will work with relevant countries and international financial institutions to jointly play a positive role in helping Sri Lanka navigate the situation, ease its debt burden and achieve sustainable development,” Wenbin said.
The IMF is also working on “appropriate” debt restructuring that has to be done on an equitable basis with all of the creditors doing what’s necessary to support Sri Lanka.
It may be mentioned that in April 2022, Sri Lanka announced a default of $51 billion on foreign debt and said it awaited a bailout from the International Monetary Fund (IMF). Quite a few economists hold the US as one of the culprits behind the Sri Lankan crisis blaming the American interest rate hikes that put huge pressure on Sri Lanka’s dollar-dependent economy, while China became one of the biggest creditors of the island nation.
– global bihari bureau