07.03.2023
Sri Lankan President Wickremesinghe said that his debt restructuring plan has been supported by China, and the International Monetary Fund is expected to provide Sri Lanka with a loan of US$2.9 billion in the second half of this month. Sri Lanka, with a population of 22 million, is struggling to overcome its worst economic crisis since independence in 1948.
(Deutsche Welle Chinese website) Sri Lankan President Ranil Wickremesinghe said in parliament that the economy has improved, but the country still has insufficient foreign exchange to meet import demand. The International Monetary Fund’s (IMF) bailout plan is therefore crucial, and other international creditors will also provide loans to Sri Lanka.
Wickremesinghe said,ChinaBoth the bank and the People’s Bank of China have sent letters of intent to the International Monetary Fund, the Export-Import Bank said in a letter on Monday (March 6).The letter confirms that the Chinese government will support Sri Lanka in accordance with IMF standardsexternal debt restructuring. With the letter from China and the financing guarantees provided by India and the Paris Club, Sri Lanka believes that the IMF loan project is expected to be realized in the third or fourth week of this month.
Sri Lanka last year became the first Asia-Pacific country to default on its debt in 20 years. Insufficient foreign exchange reserves have led to severe shortages of important imports such as food, fuel and medicine.
China and India are Sri Lanka’s largest creditors. According to statistics from the International Monetary Fund, as of the end of 2020, Sri Lanka’s debt owed to the Export-Import Bank of China was as high as US$2.83 billion, accounting for 3.5% of the country’s external debt.
The US-based China Africa Research Initiative estimates that by the end of 2022, Sri Lanka’s total loans to China will reach US$7.4 billion, accounting for nearly one-fifth of its public external debt.
“There will be a slew of positives from a possible imminent IMF announcement, with Sri Lanka expected to receive more relief as the bailout package is approved,” said Udeeshan Jonas, chief strategist at CAL Research. U.S. dollar loans.”
With China and the West at odds over how to write off debt,zambia and sri lankaReceiving a bailout from the International Monetary Fund for both countries has also been severely delayed. Sri Lanka is awaiting a “staff-level” deal with the International Monetary Fund and a series of unpopular measures to meet the lender’s demands, including higher taxes and utility charges and cuts to subsidies. After 187 days, a bailout plan was finally reached.
Today, Chinese Foreign Minister Qin Gang said at the press conference of the Two Sessions that China will continue to participate in the resolution of international debt issues with a constructive attitude when responding to doubts that the “Belt and Road Initiative” may lead to a “debt trap”. He also called on other parties to act together and share the burden fairly.
(Reuters)
© 2023 Deutsche Welle Copyright Statement: All content in this article is protected by copyright law and may not be used without special authorization from Deutsche Welle. Any wrongdoing will result in recovery and be subject to criminal prosecution.