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Wednesday July 6th, 2022

Sri Lanka PM talks debt restructuring, One China policy with Chinese envoy

China has lent the largest amount of commercial loans to cash-strapped Sri Lanka as a bilateral lender.

ECONOMYNEXT – Sri Lanka Prime Minister Ranil Wickremesinghe has discussed debt restructuring with Deputy Chinese Ambassador Hu Wei and has also assured him of the island nation’s “adherence” to the ‘One China Policy’, the prime minister’s office said.

“Sri Lanka was looking forward to discussing the debt restructuring with China (sic),” the statement said Tuesday June 21 afternoon.

China has lent the largest amount of commercial loans to cash-strapped Sri Lanka as a bilateral lender. Beijing has been hesitant to restructure Chinese debt claiming it would then have to do the same for other debtor nations.

Debt restructuring is crucial for Sri Lanka, now going through its worst ever forex crisis, to reach a deal with the International Monetary Fund (IMF). The Indian Ocean country has already hired France-based Lazard as financial advisor and London-based Clifford Chance LLP as legal advisor to support the country in debt restructuring.

The One China policy, the adherence of which Wickremesinghe had assured the deputy ambassador, is United States policy which recognises the People’s Republic of China as the sole legal government of China, but only acknowledges, and does not endorse, the PRC position that Taiwan is part of China.

The One China principle, on the other hand, that there is only one sovereign state under the name China, with the PRC serving as the sole legitimate government of that China, and Taiwan is a part of China. The statement from the PM’s office used ‘One China policy’ but did not get into specifics.

The deputy ambassador has also asked Wickremesinghe about Sri Lanka’s food security initiatives and “reassured the Prime Minister that China would be donating rice to Sri Lanka to help ease the food crisis”, the statement said.

Prime Minister Wickremesinghe had previously had warned of a possible food crisis in the coming months, which will add to the woes of Sri Lankans already reeling under the prevailing forex crisis. (Colombo/Jun21/2022)

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