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China becomes a friend in need for Sri Lanka continuing economic assistance

China has assured Sri Lanka continued economic assistance, hours after Central Bank Governor Ajith Nivard Cabraal said that Sri Lanka is negotiating another loan from China.

Foreign Ministry Spokesperson Wang Wenbin said that China and Sri Lanka have been showing each other mutual understanding and support, since the establishment of diplomatic ties.

“China has always been doing its utmost to provide help for Sri Lanka’s economic and social development and will continue to do so in the future,” the Chinese Foreign Ministry spokesperson said at a media briefing in Beijing.

His comments came in response to a question raised over Cabraal’s statement that Sri Lanka is negotiating another loan from China as part of attempts to restructure its debt repayment.

Cabraal said that the loan amount has not yet been decided. However; he said the matter is being discussed and Sri Lanka hopes to reach an agreement with China at the earliest.

“There is a possibility that we would have a new loan coming from China in order to cushion the effects of our debt repayments to China itself,” the Governor had said.

He emphasized that the new loan will be sought to cushion debt repayments to China.

The Governor also said that Sri Lanka is negotiating a USD 1 billion facility with India to import goods from India.

Cabraal said that this will also help Sri Lanka in its debt repayment and promote more trade with the respective countries. 

“The central bank governor noted  that Sri Lanka is also negotiating US$ 1 billion facility with India to import goods from the neighboring nation. 

It’s a kind of an arraignment that would encourage us as well as help us to make repayments to those countries and at the same time promote more trade between the two countries as well. 

He said that countries normally do that in the midst of changing circumstances in the economy and that’s the type of discussion they have had with China as well as India. 

He revealed that those talks are at reasonable levels of advanced negotiations and they are looking forward to seeing some breakthrough in those as well. 

The restrictions imposed on the import of vehicles and other non-essential items to Sri Lanka will only be lifted when there is an inflow of foreign exchange from other sources, he added. 

He asserted that other than vehicles, all the other non-essential items are being imported ‘heavily’. “What is the non-essential item that is not available? If you go to any supermarket, you would find that almost every conceivable type of goods is available,” he emphasized.  

He said that items which are available in any part of the world are imported to Sri Lanka as well and that they also in his view can sometimes be termed as non-essential, but those also are being imported. 

“And that’s causing a fairly heavy outflow of foreign exchange as well,” he said, adding that this can sometime disturb the overall importation as well because these items which are considered non-essential are flooding the market

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