China swallows Asia forgiving Sri Lanka’s public debt
2023.03.08 03:00
China swallows Asia forgiving Sri Lanka’s public debt
By Tiffany Smith
Budrigannews.com – Sri Lanka has been informed by the Export-Import Bank of China that it will not seek immediate debt repayment for 2022 and 2023 and will accelerate negotiations on “medium- and long-term debt treatment” in order to finalize specifics in the coming months.
The IMF’s $2.9 billion, four-year bailout for the island nation will be finalized on March 20 with the announcement on Tuesday that Sri Lanka had secured financing assurances from China, India, and all of its major bilateral creditors.
Despite the fact that the situation has improved since last year, when protesters toppled a president, Sri Lanka is currently experiencing its worst economic crisis in more than seven decades. A lack of dollars has also prevented imports of essentials from taking place.
EXIM Bank wrote in a letter to the Sri Lankan government on March 6 that China has provided “firm support to Sri Lanka through a debt treatment.”
In the letter, the bank’s vice president, Zhang Wencai, stated, “You will not have to repay the principal and interest due of the bank’s loans during the above-mentioned period, in order to help relieve your short-term debt repayment pressure.”
“In the meantime, we would like to accelerate the negotiation process with your side regarding medium- and long-term debt treatment during this window period in order to finalize the specifics of a debt treatment in the upcoming months.” We will do everything in our power to help Sri Lanka maintain its debt levels.”
According to IMF data, Sri Lanka owed EXIM $2.83 billion by the end of 2020, or 3.5% of its external debt. By the end of 2022, according to calculations by the China Africa Research Initiative, Sri Lanka owed Chinese lenders $7.4 billion, or nearly a fifth of its public external debt.
“Commercial creditors to provide debt treatment in an equally comparable manner, and encourage multilateral creditors to do their utmost to make contributions to help you better respond to the crisis and emerge from it,” China wrote in the letter.
