Sri Lanka’s president has announced the government will hold separate discussions with China and the Paris Club, including India, as part of an agreement with the International Monetary Fund to manage the island’s debts.
The announcement comes amidst a dire economic crisis that has seen mass inflation and shortages in basic necessities such as food, fuel and medicine.
In March, Sri Lanka was able to secure an agreement with the IMF for a $3 billion loan which would pave the way for further support from multilateral institutions such as the World Bank and Asian Development Bank. This was despite China refusing to agree on debt restructuring with Sri Lanka and instead offering a two-year moratorium on its debts and to continue negotiations.
China has attempted to show its continued support for the island with the state-owned China Merchants Group (CMG) signing the first large investment deal since Sri Lanka declared bankruptcy.
The Hong Kong-listed company signed a $392 million agreement with the government-owned Sri Lanka Ports Authority on Saturday to jointly build the South Asia Commercial and Logistics Hub.
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