The Government of Sri Lanka understands that China is willing to support a plan to restructure the Sri Lankan debt, crucial to facilitate a loan from the International Monetary Fund to help the country out of the very serious economic crisis in which it is immersed.
“We are on the right track to comply with the IMF’s requirements”, explained this Sunday in an interview with Bloomberg the Secretary of State for Finance, Shehan Semasinghe, who intends to confirm in the near future with the IMF whether the restructuring is a sufficient guarantee to receive the approximately 2,700 million euro loan.
China’s guarantee comes days after India assured the IMF that it will back Sri Lanka’s debt restructuring plans.
President Ranil Wickremesinghe held a virtual meeting with the head of Exim Bank earlier this month, while a delegation from China also visited the nation in mid-January. Sri Lanka also concluded debt restructuring talks with Japan last week.
Sri Lanka was aiming to win IMF board approval in the first quarter of 2023 to receive much-needed funds to salvage an economy that has sunk deeper into recession amid skyrocketing inflation and soaring borrowing costs, key factors in last year’s popular revolution that led to a change of government.
“I am sure that the Paris Club will also provide its support,” said the Secretary of State about this informal group of Western bilateral creditors.
It should be remembered that Sri Lanka has almost 50,000 million euros in foreign currency debt, of which around 10,000 million is divided mainly between China, Japan and India, according to government data.