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.
Chinese Foreign Minister arrives in Sri Lanka amid broken relations and forex crisis
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)