Sri Lanka asks debt moratorium from India: report

ECONOMYNEXT – Sri Lanka’s Prime Minister Mahinda Rajapaksa has asked for three year debt moratorium from India, a media report said.

“This is something we discussed with the Indian government as well, and have asked if we could get a moratorium on all loan repayments for three years, until we can revive the economy,” Rajapaksa was quoted as saying in an interview with India’s The Hindu newspaper.

“If the Indian government takes this step, then other governments might agree to do the same thing, including China.

” The previous government took so many loans, they beggared the economy, and it is a mess. It all [now] depends on the stand India takes.”

Sri Lanka’s central government owed only 2.6 percent of its external debt to India, compared with 9.1 percent to China, according to an International Monetary Fund debt analysis in June 2019.

Several of Sri Lanka’s state enterprises also owes China. If SOEs are counted about 15 percent of the debt was owed to China.

Sri Lanka has not defaulted on its foreign debt in the past. But a moratorium was given unilaterally by some multi-lateral agencies after a tsunami hit the island in 2004.

Rajapaksa said Sri Lanka would pay the debt regardless.

“We have to do it, and we will manage somehow. We don’t want to default on our debt no matter what happens,” he said. (Colombo/Feb10/2020)