Sri Lanka begins debt restructuring talks with China
Posted on October 6th, 2022
Courtesy Borneo Bulletin
COLOMBO, SRI LANKA (AP) – Sri Lanka’s president said yesterday his government has started debt restructuring discussions with China, an important step toward finalising an International Monetary Fund (IMF) rescue of the island nation from its worst economic crisis.
President Ranil Wickremesinghe told Parliament yesterday that the initial talks will continue after China’s Communist Party congress meeting that begins on October 16.
Wickremesinghe, who recently returned from a trip to Japan, also said the Japanese authorities agreed to mediate the talks with China.
China has been supporting us from ancient times and we believe they will do the same in these difficult times,” Wickremesinghe said.
Sri Lanka is nearly bankrupt and has suspended repaying its USD51 billion foreign debt, of which it must repay USD28 billion by 2027.
Sri Lanka has reached a preliminary agreement with the IMF for a USD2.9 billion rescue package over four years. Finalisation of the rescue hinges on assurances from Sri Lanka’s creditors on debt restructuring.
China is not Sri Lanka’s biggest creditor. It has a share of about 10 per cent of Sri Lanka’s loans after Japan and the Asian Development Bank.