An Echelon Media Company
Friday January 21st, 2022
Economy

Chinese envoy confident of Sri Lanka overcoming economic crisis

ECONOMYNEXT – Chinese Ambassador to Sri Lanka Qi Zhenhong is confident of the Indian Ocean island nation overcoming its worst economic crisis in recent history as it has managed difficult challenges in the past.

“I notice that Sri Lanka is currently encountering a very difficult situation in economy and foreign reserves,” Qi Zhenhong said Sunday (09) when journalists in Colombo asked him if China would help to restructure some of Sri Lanka’s debt repayment to come out of the current economic crisis.

“In my personal opinion from a longer vision I think these difficulties are temporary.”

Sri Lanka is facing foreign exchange shortages with reserves running low and rating agencies raising doubts over the country’s ability to repay loans, with Fitch Ratings downgrading its credit to ‘CC’, barely above default.

Finance Minister Basil Rajapaksa and Central Bank Governor Ajith Nivard Cabraal has said Sri Lanka will not seek assistance from the International Monetary Fund (IMF) or re-structure commercial debt.

But President Gotabaya Rajapaksa on Sunday sought help to re-structure debt from China.

“I believe Sri Lankan people are very hardworking and very highly educated. You have the experience to tackle the difficulties. I am positive and I am confident Sri Lankan people and Sri Lanka as a country can complete the task,” Qi Zhenhong said.

“If we look back into the history of this island, I am sure that there were many other occasions where the difficulties were much bigger than the current ones.”

In terms of financial assistance, he said China has already helped and will continue to do so.

“I take a simple example of last year in 2021, the China Development Bank (CDB) provided a 500 million US dollar facility and another 2 billion Chinese yuan,” he said.

“The two central banks signed a currency swap for the 10 billion Chinese yuan which is equal to 1.5 billion US dollars. This is only a very small example of Chinese support of financial help last year.”

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