Tuesday, June 18, 2024

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IMF bail out package to Sri Lanka hangs on the Chinese balance

Sri Lanka is still not able obtain assurance from the International Monetary Fund(IMF) for a Rapid Finance Facility(RFF) owing to lack of any firm agreement on the debt restructuring among key bilateral creditors specially China,a senior official closely connected to SLforeign debt servicing revealed.

China must be treated just like any other creditor once talks begin to restructure Sri Lanka’s debt, India’s Finance Minister Nirmala Sitharaman said in Washington recently adding that she told the International Monetary Fund and World Bank about it.

China is yet to finalise a US $2.5 billion credit line or enter into an agreement on restructuring of its overall debt, the official added.

About 22 percent of Sri Lanka’s debt is owed to bilateral creditors — China and Japan (10 percent each) as well as India (2 percent ).

The main reson for this attitude of China was their reluctance to favour Sri Lanka as it will set a bad precedent for other nations who have borrowed from them .

it will also connect China with failure because the Sri Lankan economic model was based on Chinese aid , he claimed.

However Chinese Prmier Li Keqiang in telephone conversation with Prime Minister Mahinda Rajapaksa has given a firm assurance for the stability of the island nation, Prime Minister’s office announced

China will continue to provide every assistence for Sri Lanka ‘s scio economic development stability ,it added. .

China has given this assurance at a time where Sri Lanka’s closest ally India has already stepped into assist Sri Lanka even by going out of the way , at the IMF spring meetings to persuade the donor agency to help the crisis ridden country.

According to Prime Minister’s office, Chinese Premier has paledged to provide assistance to solve finacial problems faced by the country with the aim of improving living standard of the suffering people of Sri Lanka.

Foreign Minister Proff. G.L Peiris recently requested Chinese assistence for debt restcuturing at meeting with the Chinese Ambassador in Colombo Qi Zhenhong but he has not responded to it , informed sources said

China has cautioned Sri Lanka on the negotiations with the International Monetary Fund (IMF) saying it could impact talks with China.

China’s Ambassador Qi Zhenhong was quoted as saying that Sri Lanka’s talks with the IMF will have an impact on Sri Lanka’s attempt to secure a US $ 2.5 billion loan from China.

Ambassador Qi Zhenhong was quoted as telling a group of journalists today that China was closely monitoring the negotiations to understand the terms and conditions of the deal with the IMF.

Qi Zhenhong has also said that China’s support to Sri Lanka will not be based on a particular party or Government. but the people of Sri Lanka.

The IMF has decided to support Sri Lanka’s efforts to overcome the current economic crisis by working closely with the authorities on their economic program.

Issuing a statement this week the IMF said that it will engage with all stakeholders in support of a timely resolution of the crisis.

The IMF team for Sri Lanka held initial technical discussions on an IMF-supported program with the delegation.

Masahiro Nozaki, mission chief for Sri Lanka said the IMF team will support Sri Lanka’s efforts to overcome the current economic crisis by working closely with the authorities on their economic program, and by engaging with all other stakeholders in support of a timely resolution of the crisis

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