China silent on Sri Lanka’s debt cancellation request
China has once again been silent on Sri Lanka’s request for debt restructuring, but said it had helped the island nation to the best of its ability to overcome its currency crisis. Sri Lanka, which has become a key foothold for China in the Indian Ocean region, is currently reeling from a severe foreign exchange crisis with dwindling reserves and the government unable to pay the invoice for essential imports.
Last December, Sri Lankan President Gotabaya Rajapaksa asked Beijing for help to ease the worsening currency crisis and spiraling external debt in his country.
Gotabaya, when meeting with Chinese Foreign Minister Wang Yi, referred to Sri Lanka’s worsening currency crisis and soaring foreign debt and asked for Beijing’s help.
Gotabaya stressed that it would be a great relief for Sri Lanka if attention could be given to restructuring debt repayments as a solution to the economic crisis that arose in the face of the COVID-19 pandemic.
Sri Lanka is estimated to owe debt payments to China in the region of $1.5 billion to $2 billion this year. Overall, China’s loans and investments in Sri Lanka have been estimated at more than $8 billion over the past few years.
But Beijing has not made a public pledge for Sri Lanka’s debt relief aid so far.
Asked about Sri Lanka’s pending request for debt relief, Chinese Foreign Ministry spokesman Zhao Lijian told a press conference on Wednesday that “China has provided development assistance socio-economic development of Sri Lanka to the extent of its ability, and will continue to do so in the future”. ”.
“Thanks to the efforts and solidarity of the government and people of Sri Lanka, it is believed that the country will soon overcome the temporary difficulties and embrace even greater development,” he said.
The island nation is currently facing a dire economic situation as it struggles to repay expensive loans.
China has yet to give a firm commitment to Sri Lankan President Gotabaya’s request last month for assistance from Beijing to ease his country’s deepening economic crisis, including fuel shortages and of diesel.
China’s takeover of the port of Hambantota on a 99-year lease for a $1.2 billion debt swap has sparked international concern over Beijing’s acquisition of strategic assets away from home in granting large loans and investments to small nations.
The Port of Hambantota and the proposed port city of Colombo, where China is building a new city with land reclaimed from the sea, have been viewed with concern, particularly in India as Beijing has cemented its position in Sri Lanka, strategically located in the Indian Ocean.
The International Monetary Fund said Sri Lanka’s economy faced “increasing challenges” with public debt reaching “unsustainable levels”, and called for urgent reforms in the island nation’s economy as it faces the worst economic crisis.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)