Saturday, October 1, 2022

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Reason for China’s unwillingness on debt restructuring revealed

Despite Sri Lanka trying hard to obtain the support of the International Monetary Fund (IMF) to recover from the huge economic crisis befallen the island nation via several rounds of discussions on and off the land, the efforts so far have not been successful, sources said.

The IMF is of the view that Sri Lanka must resort to debt restructuring for the debts it obtained from foreign states and fiscal bodies, should a relief be provided. In contrast to this condition, a number of parties, including China, which is Sri Lanka’s primary creditor, have not agreed to restructure the debts.

A REUTERS report claimed that many countries, including Sri Lanka, have obtained debts and are requesting debt reliefs from China, due to which the debt restructuring policy is being reconsidered.

Known for its reputation of not disclosing debt conditions and how it enters into agreements with states which are unable to settle debts, China is the world’s largest bilateral creditor, who, according to the REUTERS report, now finds the backdrop challenging.

From 2000 to 2017, China has lent US $ 843 billion to 165 countries in the world, and the interest free loan percentage of these debts was less than five per cent.

China has cut the interest-free loans it had given to 17 countries in the African region on 23 occasions, the report added.


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