Debt relief reiterated by China to Sri Lanka falls short of overall burden on country
Feb 09, 2023
Colombo [Sri Lanka], February 9 : The debt relief reiterated by China to Sri Lanka last week, still fell short of the overall burden on the country, according to analysts, Sri Lanka-based Daily Financial Times Newspaper reported.
China's Foreign Ministry Spokesperson Mao Ning during the regular briefing on Friday repeated the announcement by Export-Import (EXIM) Bank of China on January 19.
EXIM Bank of China, as the official bilateral creditor, provided a financing support document to the Ministry of Finance, Economic Stabilisation and National Policies of Sri Lanka, saying it is going to provide an extension on the debt service due in 2022 and 2023.
This meant Sri Lanka will not have to repay the principal and interest due of EXIM Bank's loans during this period "so as to help relieve Sri Lanka's short-term debt repayment pressure", according to Daily Financial Times.
The Bank said that it will support Sri Lanka in its loan application to the IMF.
According to Daily Financial Times, experts and analysts opined that EXIM Bank's outstanding debt is only USD 4,023 million whereas Sri Lanka owes a further USD 3,000 million to China including USD 2,950 million to China Development Bank (CDB).
According to analysts, "Ideally China, if it wants to live up to what it claims to be to Sri Lanka, should give a broader expression of support in terms of debt relief."
Others opined that Sri Lanka will have to deal separately with CDB since it is categorised under "Commercial" creditors.
China's Foreign Ministry Spokesperson Ning on Friday said that 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 added.
Dailt Mirror recently reported that China's offer to Sri Lanka of a two-year moratorium on its debt is not adequate to clear the way for the International Monetary Fund (IMF) to allow a funding program.
Citing sources, the news report said that the IMF needs more assurances from China to secure IMF board approval for the bailout package for Sri Lanka. Earlier, China's Foreign Ministry said that Export-import Bank of China (EXIM) has extended debt to Sri Lanka.
