As a traditional friendly neighbour of Sri Lanka and a major shareholder of the International Monetary Fund, China has always been encouraging the IMF and other international financial institutions to continue to play a positive role in supporting Sri Lanka’s response to the current crisis .
It will assist the debt ridden country to overcome difficulties and efforts to ease the debt burden and realise sustainable development, the Chinese embassy said in a statement.
The statement said after the Sri Lankan government announced to suspend international debt payments in April 2022, Chinese financial institutions reached out to the Sri Lankan side and expressed their readiness to find a proper way to handle the matured debts related to China.
It has offered help Sri Lanka to overcome the current difficulties a spokesperson of the embassy said adding that China hopes that Sri Lanka will work actively with China in a similar spirit and work out a feasible solution expeditiously.
China is willing to help Sri Lanka cope with the economic crisis plaguing the country, according to the Chinese Ministry of Commerce.
Sri Lanka is going through its worst economic crisis in seven decades and the foreign exchange deficit is making it difficult for millions of people to buy food, medicine, fuel, and other necessities.
Chinese Commerce Ministry spokesman Shu Jueting noted that “China will continue to support Sri Lanka to the best of its ability amid the country’s difficulties so that it can recover its economy as soon as possible and improve the people’s living conditions.”
The Chinese official referred to the China-Ceylon Rice Rubber Pact, signed in 1952, which reflects both nations’ spirit in fighting hegemony and power politics. “We will together maintain a healthy and stable development of relations under our trade agreement,” the spokesperson said
Meanwhile the International Monetary Fund (IMF) said Sri Lanka should kick off debt restructuring talks with its bilateral lender China, while the island state’s Government reaches staff level agreement ona bail out loan from the Washington-based fund.
“China is a big creditor and Sri Lanka has to engage proactively with it on a debt restructuring,” IMF’ official said.
The country owes Beijing some $ 6.5 billion in financing including development bank loans and a central bank swap, according to data from the Institute of International Finance (IFF).
The country defaulted on a bond payment debt earlier this year on its $ 12 billion overseas debt with private creditors, as it struggles to pay for imports of basic goods.
An Extended Fund Facility (EFF) program from the IMF, which would be the fund’s 17th plan for the nation, requires countries to make structural economic reforms.
