Colombo (LNW): China’s Export-Import Bank (EXIM) has entered a preliminary agreement with Sri Lanka concerning the handling of debts linked to China, announced Wang Wenbin, a spokesperson for China’s Foreign Ministry.
This development comes as Sri Lanka, facing its most significant economic crisis in over 70 years, seeks debt relief from China, its primary bilateral lender.
The country suspended its debt repayments in May of the previous year and is currently in discussions with the International Monetary Fund (IMF) for a US $2.9 billion bailout package.
As of the end of 2022, Sri Lanka’s debt to China’s EXIM stood at US $4.1 billion, equating to 11 per cent of the nation’s foreign currency debt.
While China is committed to assisting Sri Lanka, there is ongoing speculation about whether the IMF requires more information from Sri Lanka’s creditors to proceed with its financial support.
Some of Sri Lanka’s official creditor committee members are allegedly advocating for a debt restructuring deal without China’s involvement.