ECONMYNEXT – China is “sad” that Sri Lanka went to the International Monetary Fund (IMF) and defaulted on its debt, Ambassador Qi Zhenhong said, adding that China is watching the island nation’s negotiations with the Washington-based lender.
“China has done its best to help Sri Lanka not to default but sadly they went to the IMF and decided to default,” Ambassador Qi told reporters at a media briefing in Colombo.
“The debt restructuring definitely will have an impact on future bilateral loans,” he said.
Ambassador Qi said in March that China was considering a request for 1.5 billion US dollars in buyer’s credit and another billion-dollar loan.
The IMF determined that Sri Lanka’s debt was not sustainable or could not be repaid with macro-economic adjustments involving rate and tax hikes alone and had to restructure debt to reduce the gross finance need to a manageable level.
On April 12, Sri Lanka said it was suspending payment on foreign debt and will negotiate with creditors.
Now China was waiting for IMF talks to progress and wanted more information on debt restructuring. Sri Lanka will negotiate with the Paris Club of western donors, other lenders like China and India, multilateral and separately with bondholders.
“We are closely monitoring the IMF discussion between Sri Lanka and IMF,” he said.
“Countries that colonised Sri Lanka have more obligations to help at this juncture.”
However China will continue to disburse old loans as agreed, he said. (Colombo/Apr25/2022)