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Sri Lanka president says debt restructuring talks with India were 'successful'

Sri Lanka president says debt restructuring talks with India were 'successful'

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By PTI Dec 6, 2022 6:17:30 PM IST (Published)

India has rushed about $4 billion in assistance in the form of line credit and other modes to help Sri Lanka this year, which has virtually declared insolvency and defaulted on all foreign loans.

Forex-starved Sri Lanka has held ”successful” talks with India on debt restructuring and will also begin discussions with China, President Ranil Wickremesinghe said, as the island nation scrambles to get assurances from major bilateral creditors to close a crucial deal with the International Monetary Fund (IMF).

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Sri Lanka, which is trying to secure a $2.9 billion bridge loan from IMF, is also looking at financial assurances from its major creditors — China, Japan and India — which is the requisite for Colombo to get the bailout package.
“We have initiated discussions with our bilateral creditors. Had very successful talks with India, and will also begin talks with China,” Wickremesinghe said during the inaugural session of the Sri Lanka Economic Summit 2022 on Monday.
Sri Lanka has large debt rollover volumes (Gross Financing Need) running up to 37 percent of its GDP in 2022, which the IMF wants to bring down, according to the EconomyNext news portal. The exact GFN target is not known, but other countries under restructuring have levels around 15 percent, and some less, it said.
China, however, continues to be ambivalent about its stand on loans to Sri Lanka as it is set for talks with the IMF for debt restructuring of several recipient countries of Chinese finances, which are defaulting on their external debt.
Sri Lanka, which went bankrupt earlier this year, had announced a default on over $51 billion in foreign loans, including that of China. China has also announced assistance of 500 million RMB (about $74 million) for the supply of essential goods, but it remained silent about former President Gotabaya Rajapaksa’s request to defer the loan repayment.
When asked about its stand during talks with the IMF to restructure Chinese loans to Sri Lanka, Chinese Foreign Ministry spokesperson Mao Ning reiterated Beijing’s stand that it supports financial institutions to solve Colombo’s financial crisis.
“On Sri Lanka’s debt issue, I would like to stress that China attaches high importance to Sri Lanka’s difficulties and challenges,” Mao told a media briefing here on Monday.
“We support the financial institutions in working out ways with Sri Lanka to properly solve the issue. We also hope relevant countries and international financial institutions will work with China and continue to play a constructive role in helping Sri Lanka overcome the current difficulties, ease its debt burden and realise sustainable development,” she added.
India has rushed about $4 billion in assistance in the form of line credit and other modes to help Sri Lanka this year, which has virtually declared insolvency and defaulted on all foreign loans.
In November, Sri Lanka said it held a ”productive” second round of crucial talks with its bilateral creditors.
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