Sri Lanka’s largest bilateral creditor, China, has assured the island nation its help in effectively addressing the debt challenges as it has to finalise the external and domestic debt restructuring of a whopping USD 41 billion by September before the IMF’s first review.
The International Monetary Fund (IMF) is set to conduct its first review of the USD 2.9 billion bailout granted to Sri Lanka in March this year from September 11-19. A release from the Prime Minister’s Office on Wednesday said Wang Yi, the Foreign Minister and Director of the Office of the Foreign Affairs Commission of the ruling Communist Party of China (CPC) Central Committee who met Sri Lanka Prime Minister Dinesh Gunawardena on the sidelines of the seventh China-South Asian Expo assured that it will help in effectively addressing the country’s debt challenges.
“China is always Sri Lanka’s reliable strategic partner and appreciates that Sri Lanka has always been friendly to China and has stood by China on issues related to its core interests”, Wang was quoted as saying. Sri Lanka is currently negotiating with its external creditors in order to meet the IMF’s condition for its first review since the bailout of USD 2.9 billion approved in March over the next 4 years. The IMF has already announced its mission to Colombo for review between September 14 and 27.
Sri Lanka should agree with all its external creditors by next month on the programme to restructure the debt of USD 41 billion. The island nation was hit by its worst economic crisis in history last year when the country’s foreign exchange reserves fell to a critical low and the public came out on the streets to protest the fuel, fertilisers, and essential commodities shortage. Indian credit lines and other facilities worth more than USD 4 billion helped the island withstand the crisis as street protests marked the shortages of essentials and power needs.