Courtesy Global Times

China-aided nephrology hospital in Sri Lanka

China maintains good long-term cooperative relations with international financial institutions including the IMF and supports relevant financial institutions to properly negotiate and address debt issues with Sri Lanka, Chinese Foreign Ministry spokesperson Mao Ning said on Monday, in response to media reports about an IMF team’s visit to China this week to discuss debt restructuring for Sri Lanka.

We urge relevant countries and international financial institutions to work with China to continue playing an active role in helping Sri Lanka cope with its difficulties, help the country relieve debt burdens and achieve sustainable development,” Mao said, while noting that China has empathy with the difficulties and challenges faced by Sri Lanka.

According to a Reuters report on Thursday, IMF Managing Director KristalinaGeorgieva said that she will travel to Beijing this week with heads of other international institutions to discuss actions on debt relief for some developing countries. 

World Bank President David Malpass told the conference that he would join the discussions in Beijing, along with officials from the World Trade Organization, Organization for Economic Cooperation and Development and others, according to the report. 

On September 1, Sri Lanka reached an agreement with the IMF to obtain $2.9 billion over four years to help salvage the country from its worst economic crisis. 

According to an IMF statement, the agreement is contingent on the implementation by the authorities of prior actions, and on receiving financing assurances from Sri Lanka’s official creditors and making a good-faith effort to reach a collaborative agreement with private creditors.” 

In November, Sri Lanka postponed a round of debt restructuring talks, which officials said would give the country time to provide clarifications sought by its creditors. Sri Lanka has set a target of getting board-level IMF approval in December, another Reuters report said. 

Sri Lanka’s largest creditors are international financial organizations like the World Bank and the Asian Development Bank, and a substantial amount is also owed to other institutional investors from the West,  including those on Wall Street, Sri Lanka’s Ambassador to China PalithaKohona told the Global Times in a previous interview. Other creditors include Japan, China and India. Only about 10 percent of Sri Lanka’s external debt is owed to China.

Sri Lanka has defaulted on a massive amount of debt – over $56 billion, according to a Washington Post report, and many of the 22 million people in Sri Lanka have been left without daily necessities, fuel, food and medications.

The economy of Sri Lanka is expected to contract by 8.7 percent in 2022 and inflation recently exceeded 60 percent, according to IMF