The International Monetary Fund (IMF) has said Sri Lanka should kick off debt restructuring talks with its bilateral lender China, while the island state’s government seeks a financing loan from the Washington-based fund.

“China is a big creditor, and Sri Lanka has to engage proactively with it on a debt restructuring,” Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, told Reuters in an interview on Tuesday.

The world’s second-largest economy has invested in projects such as highways, a port, an airport and a coal power plant and despite the widespread debt trap claims, Sri Lanka's debt to China represents around 10% of its total external debt.

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