Courtesy The Daily Mirror

China’s Foreign Ministry Spokesperson Mao Ning said today that the Export-Import Bank of China will provide an extension on the debt service to Sri Lanka due in 2022 and 2023, which means Sri Lanka will not have to repay the principal and interest due on the Bank’s loans during the above-mentioned period, so as to help relieve Sri Lanka’s short-term debt repayment pressure.

Meanwhile, she said the Bank would like to have friendly consultations with Sri Lanka regarding medium- and long-term debt treatment in this window period and the Bank will make best efforts to contribute to the debt sustainability of Sri Lanka. 

The Bank also noted that it will support Sri Lanka in its loan application to the IMF. In the meantime, the Bank will continuously call on commercial creditors (including the International Sovereign Bondholders) to provide debt treatment in an equally comparable manner, and encourage multilateral creditors to do their utmost to make corresponding contributions, she said at a regular Press conference.

“As we have said several times, as a friendly neighbor and true friend, China has been providing assistance for Sri Lanka’s economic and social development to the best of our capabilities. The financing support document is aimed at combining an immediate contingency measure” and medium- and long-term debt treatment” to rapidly, effectively and truly resolve Sri Lanka’s debt issue. As far as I have learned, China is the first official bilateral creditor to have taken the initiative to announce debt extension to Sri Lanka. This speaks to China’s sincerity and action to support Sri Lanka’s effort to achieve debt sustainability,’ she said.

Ning further said that China calls on all other creditors of Sri Lanka, especially multilateral creditors, to take synchronized, similar steps and give effective, strong support to Sri Lanka to help the country emerge from its default status at an early date and eventually work out an arrangement for Sri Lanka to achieve medium- and long-term debt sustainability. China also calls on the IMF to take into full consideration the urgency of the situation in Sri Lanka and provide loan support as soon as possible to relieve the country’s liquidity strain.

“Going forward, China will continue to support relevant financial institutions in actively working out the debt treatment. We will work with relevant countries and international financial institutions to jointly play a positive role in helping Sri Lanka navigate the situation, ease its debt burden and achieve sustainable development,” the Spokesperson said.

When asked if there is any communication with the IMF wherein the IMF has confirmed that Chinese assurances to Sri Lanka are credible, sufficient and enough, she said that China hoped the IMF will take into full consideration the situation on the ground in Sri Lanka and provide loan support as soon as possible so as to relieve the country’s liquidity strain.(Darshana Sanjeewa Balasuriya)