ECONOMYNEXT – Sri Lankan President Gotabaya Rajapaksa has requested debt relief and import credits from China following meeting with Chinese Foreign Minister Wang Yi, his office said .

“The president stressed that it would be a great relief for the country if attention could be focused on restructuring debt repayments as a solution to the economic crisis that has arisen in the face of the Covid-19 pandemic,” said a statement from the president’s media office said.

“The president also said that if a concessional trade credit program could be launched for imports from China, it would allow industries to operate smoothly. “

Sri Lanka faces currency shortages and loss of reserves due to money printed to keep interest rates low after cutting taxes as part of a fiscal and monetary ‘stimulus’ in the middle of a coronavirus pandemic.

Sri Lanka had also signed several subsidy agreements for housing, medical care and the renovation of a conference hall in Colombo offered by China.

Sri Lanka had around $ 3.5 billion in central government debt to China at the end of 2020, not counting loans to state-owned enterprises.

China’s foreign minister arrived in Sri Lanka after a growing dispute over contaminated organic fertilizer was settled.

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An International Monetary Fund report released in 2019 indicated that about 9.1 percent of the central government’s external debt was owed to China, and that when accounting for state-owned enterprises, it was around 15 percent at the end of the year. 2018.

Sri Lanka’s central bank also used a US $ 1.5 billion renminbi swap in December 2021 to bring year-end reserves to US $ 3.1 billion, or about 2 months of imports.

India is also expected to give around US $ 400 million through a swap and a US $ 500 million fuel line of credit. Another billion dollars in credits is expected from India. (Colombo / Jan08 / 2021)