In a letter sent to the finance ministry on 19 January, the Export-Import Bank of China offered Sri Lanka a two-year debt moratorium.
The bank also stated that it would support Sri Lanka's efforts to secure a $2.9 billion dollar loan from the International Monetary Fund (IMF).
Earlier this month a group of 182 development experts and economists called on creditors to cancel Sri Lanka's debt in order for the island to move forward with restructuring its economy.
According to the letter, China Exim Bank said it would provide "an extension on the debt service due in 2022 and 2023 as an immediate contingency measure." The letter also stated that Sri Lanka "will not have to repay the principal and interest due of the bank’s loans during the above-mentioned period."
However, the letter may not be enough to immediately gain approval for an IMF loan. The IMF has yet to comment on the letter sent by the China Exim Bank.
China is one of Sri Lanka's largest bilateral lenders. As of 2020, Sri Lanka owed the Chine Exim Bank $2.83 billion. Overall, Sri Lanka owes Chinese lenders $7.4 billion.
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