China’s debt factor in Colombo files has now become crucial for Sri Lanka’s economic revival with the International Monetary Fund (IMF) US2.9 billion bail out loan hanging on the balance.
The IMF is keeping radio silence on its executive board’s approval deadline and the status of Sri Lanka creditors’ assurances on debt restructuring which was quite different from Central Bank Chief Nanadalal Weerasinghe S guessing and missing and silencing stance on central bank tools towards shrinking economy.
The current economic crisis was confirmed as a foreign exchange crisis that led to the depreciation of the rupee on one side and imposition of extreme import and exchange controls, on the other.
The Government sought an IMF bailout rather late but there were some preconditions which it had to fulfill.
According to the Central Bank most of these conditions which were not divulged by CB chief in radio silence have been met except the major one relating to the restructuring of the unsustained public debt.
However China, a major lender, had been non supportive with the other creditors. After long negotiations, it had offered only a loan moratorium of two years which increased Sri Lanka’s foreign debt obligations. Hence, the bailout deadline of Nadalal is now infamous for getting postponed every month.
In this latest development, the Ceylon Chamber of Commerce welcomed and appreciated the financial assurances provided by creditors thus far, towards achieving Board approval from the International Monetary Fund and called on China to do the same.
“The timely announcements by India, Paris Club members including members such as Japan, US and UK, and non-members such as Hungary, are highly encouraged and appreciated by the business community at this time,” the Chamber said in a statement.
“We are also encouraged by the assurances provided by the international bondholders to engage with Sri Lanka towards restoring debt sustainability.
We look forward to similar assurances from other commercial and bilateral creditors including China, in line with the IMF requirements that will result in a swift approval of the IMF program,” the Ceylon Chamber said.
The Chamber said it appreciates the support given by China in the economic development of Sri Lanka and requests to work with the IMF in order for Sri Lanka to receive its much needed funding as a key bilateral creditor.
The Ceylon Chamber said securing the IMF program will be a crucial first step in Sri Lanka’s debt restructuring efforts which will reduce the present economic uncertainty.
The Government has carried out an initial set of reforms and we expect more reforms to take place post IMF Board approval that will provide an impetus towards economic revival.
The Ceylon Chamber also urged the IMF to consider the assurances received thus far and initiate the approval process, as continual delays will place Sri Lanka in an extremely vulnerable social and economic position.
