The Export-Import Bank of China (Exim) has assured support to Sri Lanka in its loan application to the International Monetary Fund (IMF).
Chinese Foreign Ministry Spokesperson Mao Ning has told the media the Exim Bank provided a financing support document to Sri Lanka’s Ministry of Finance.
The letter has informed that the Exim Bank is going to provide an extension on the debt service due in 2022 and 2023 to help relieve Sri Lanka’s short-term debt repayment pressure.
Spokesperson Ning said the Bank continuously calls on commercial creditors including the international sovereign bondholders to provide debt treatment in an equally comparable manner, and encourages multilateral creditors to do their utmost to make corresponding contributions.
“What China did is first based on China’s existing policy and position on the debt issue. At the same time, as a special arrangement, it also reflects the traditional friendship between China and Sri Lanka.”
“China’s action fully demonstrates its sincerity and efforts to support Sri Lanka in achieving debt sustainability,” Mao said, stressing that China will continue to support relevant financial institutions in actively working out the debt treatment.
“We will work with relevant countries and international financial institutions to jointly play a positive role in helping Sri Lanka navigate the situation, ease its debt burden and achieve sustainable development,” she added.
10 year repayment period on concessionary terms needed
Meanwhile, professor of economics and statistics at Peradeniya University Wasantha Athukorale has told Neth News that the IMF bailout package would not be possible until agreement is reached with China on the bilateral lendings.
Also, at least a 10 year repayment period on concessionary terms is required from China, he added.