Lanka will discuss debt restructuring separately with China-minister

By SHIHAR ANEEZ

ECONOMYNEXT –Sri Lanka will discuss its bilateral debt restructuring process separately with China, but Beijing will be treated equally as the other bilateral lenders, the island nation’s Foreign Minister Ali Sabry said.

Sri Lanka has already started negotiations with its bilateral lenders through Paris Club members and non-Paris Club members. China, however, has not agreed to discuss the debt restructuring process along with other non-Paris Club members, Sabry said.

“Chinese are not comfortable with getting into this common platform. But they are negotiating with us as bilateral creditors,” Sabry told a media briefing on Monday (03) held in Colombo.

“Good thing is that they know the parameters of the negotiation of the common platform. So there is nothing to reinvent the wheel. The idea is to give them also the same comparable treatment but that’s on a bilateral basis,” he said.

China is one of the largest bilateral lenders to Sri Lanka which has defaulted on its external sovereign debts in April last year after an unprecedented economic crisis.

“They are not comfortable coming into this for their own reasons. That’s okay with us as long as finally they agree and come and give us the same relief what we want.”

Other bilateral creditors of Sri Lanka have raised concerns over Beijing’s sluggish process on the debt restructuring before the Export-Import Bank of China offered Sri Lanka a two-year moratorium on its debt before an International Monetary Fund approval of a $3 billion loan.China was the top lender to Sri Lanka’s post-war infrastructure development. During 2010-2016, it accounted for 37 percent of the total external borrowing.

Sri Lanka borrowed $5.9 billion from China for infrastructure development during this period and more than half of these loans from China came through unsolicited proposals for public funded infrastructure projects circumventing the normal competitive procurement process.

China has lent through directly from the Chinese government, from its exim bank and through the Chinese Development Bank.The common platform to discuss Sri Lanka’s bilateral loans introduced by Paris Club, India, and Japan together.

“China, though not a part of the platform, is taking part as the observer. So they know what exactly is being discussed and what kind of relief we will give the bilateral lenders, Sabry said.

“We have very specifically – the president in his to all the bilateral creditors – told all bilateral relief will be comparable. That means no one will get anything better than the others. So it is understood that everybody will be getting the same treatment ultimately when it comes to bilateral creditors.”

“Our understanding and our belief is that – we are talking to the Chinese. We have had several rounds of discussions. We have had initial discussions on the nitty gritties of that. We are very confident that China will help us.”