Sri Lanka asks China to restructure debt

Sri Lankan President Gotabaya Rajapaksa on Sunday sought Chinese assistance to restructure the debt owed by the island nation to the Asian giant. “The President pointed out that it would be a great relief to the country if the attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the COVID-19 pandemic,” the Presidential Media Division said in a statement on Mr. Gotabaya’s meeting with Chinese Foreign Minister Wang Yi in Colombo. Mr. Wang concluded his fve-nation tour of littoral countries in the Indian Ocean Region, with a one day visit to Colombo on Sunday, following a visit to the Maldives. Sri Lanka owes China over $5 billion, amounting to about 10 % of the country’s total foreign debt. Mr. Gotabaya’s request to Beijing to restructure it comes during an unprecedented economic meltdown in Sri Lanka, with the country’s foreign reserves rapidly declining following the devastating impact of the pandemic on its crucial export and tourism sectors over the last two years. In November, Sri Lanka’s foreign reserves stood at $1.6 billion, triggering widespread concern about how Colombo might pay its high imports bill, especially when the Sri Lankan rupee has considerably weakened. Prime Minister Mahinda Rajapaksa made a similar request to New Delhi in February 2020 for a debt moratorium, but there has been no response since. “If India agrees to postpone debt by three years, we can convince others too,” Mr. Mahinda then told The Hindu in New Delhi. Requests to India New Delhi is also yet to respond to more recent requests from Colombo for emergency Lines of Credit for import of food, fuel and medicines, and a currency swap to boost reserves, although External Afairs Minister S. Jaishankar has assured Colombo of support “in difficult times”.

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