With the country on the brink of financial default, Sri Lankan President Gotabaya Rajapaksa has requested for debt restructuring from China.
The request comes as China’s Foreign Minister concluded his first international tour of the new year in Colombo. During his tour, he visited Eritrea, Kenya, the Comoros in East Africa and the Maldives. Whilst in Sri Lanka he also spoke with Prime Minister Mahinda Rajapaksa. His visit to Sri Lanka coincides with the 65th anniversary of diplomatic ties between China and Sri Lanka.
Sri Lanka owes over $5 billion to China, approximately 10% of the country’s total foreign debt. The country’s foreign reserves however have plummeted and in November only stood at $1.6 billion raising concerns over the country’s ability to pay its high imports bill.
The Hindu notes that Sri Lanka made a similar restricting request to New Delhi in February 2020 however there has been no response on this request. “If India agrees to postpone debt by three years, we can convince others too,” Mahinda Rajapaksa told the Hindu.
Sri Lanka foreign debt obligations for 2022 stands over $7 billion, including bond repayments of $500 million in January and $1 billion in July.
In December Sri Lankan finance minister Basil Rajapaksa met with Indian officials to request a currency swap as well as emergency lines of credit for the import of food, fuel and medicines. Whilst the Indian government has not responded to these requests it has affirmed its willingness to offer support to Sri Lanka.
During the meeting, both parties agreed to a four-point economic plan which included “facilitating Indian investments in different sectors in Sri Lanka” and an agreement to develop the Trincomalee Tank Farm – a reversal from a previous Sri Lankan position.
Read more here: Sri Lanka’s Indo-phobia and Gammanpila’s U-turn - A closer look at the Trinco oil deal
Rajapaksa reportedly is also considering providing China with a concessional trade-credit scheme for imports. China is Sri Lanka’s largest partner for imports, with 22$ of the island nation’s imports originating from China.
Read more here.
We need your support
Sri Lanka is one of the most dangerous places in the world to be a journalist. Tamil journalists are particularly at threat, with at least 41 media workers known to have been killed by the Sri Lankan state or its paramilitaries during and after the armed conflict.
Despite the risks, our team on the ground remain committed to providing detailed and accurate reporting of developments in the Tamil homeland, across the island and around the world, as well as providing expert analysis and insight from the Tamil point of view
We need your support in keeping our journalism going. Support our work today.
For more ways to donate visit https://donate.tamilguardian.com.
