Sri Lanka President calls for debt relief and import credit from China
ECONOMYNEXT – Sri Lankan President Gotabaya Rajapaksa has requested debt relief and import credits from China following meeting with Chinese Foreign Minister Wang Yi, his office said .
“The president stressed that it would be a great relief for the country if attention could be focused on restructuring debt repayments as a solution to the economic crisis that has arisen in the face of the Covid-19 pandemic,” said a statement from the president’s media office said.
âThe president also said that if a concessional trade credit program could be launched for imports from China, it would allow industries to operate smoothly. “
Sri Lanka faces currency shortages and loss of reserves due to money printed to keep interest rates low after cutting taxes as part of a fiscal and monetary ‘stimulus’ in the middle of a coronavirus pandemic.
Sri Lanka had also signed several subsidy agreements for housing, medical care and the renovation of a conference hall in Colombo offered by China.
Sri Lanka had around $ 3.5 billion in central government debt to China at the end of 2020, not counting loans to state-owned enterprises.
In a 2018 report, an International Monetary Fund report said about 9.1% of the central government’s external debt was owed to China, and including state-owned enterprises, it was around 15%.
China also granted a US $ 1.5 billion swap to the central bank, which was used in December 2021.
(Colombo / Jan08 / 2021)