PM confident China will help Sri Lanka to weather the crisis

Prime Minister Ranil Wickremesinghe expressed confidence that Sri Lanka’s relationship with India would not be impacted as it reaches out to China for further assistance to bail out the crisis-hit economy.In an interview with Financial Times last week, Wickremesinghe dismissed concerns that additional funding from China could complicate ties with India.The neighbouring giant has continued to extend support to the island nation with financial assistance and also advocated with the International Monetary Fund (IMF) to facilitate the much-needed loan programme. India has offered credit lines, swaps and other assistance amounting to more than US $ 3 billion.

However, acknowledging that the support from India would be limited going forward, Wickremesinghe said Sri Lanka would have to rely on its ties with Japan and China for further funding.

“With India we’ve had a special relationship and as long as we don’t do anything to harm India’s national security, we can get along,” he told Financial Times.

Wickremesinghe shared that the government would reach out to Beijing and other creditors, including private bondholders for restructuring talks, only after the negotiations with the IMF have been finalised.China has agreed to provide aid and additional loans to Sri Lanka, after it refused the request to renegotiate the debt amounting to US $ 3.5 billion.

“It’s quite substantial. It would be a few hundred million dollars. It’ll still help us get hold of essential consumer items, fertilisers … the Finance Ministry is having discussions on some of the items,” he said at the interview. Wickremesinghe told Financial Times that securing the IMF funding is likely to require politically contentious reforms such as cutting public spending and privatising state-owned companies.

The status of Sri Lanka’s debts to China is being closely watched by the policymakers and analysts, who said Beijing had been reluctant to accept losses on its loans in other Belt and Road Initiative participants such as Zambia.Wickremesinghe, who also took over the role of finance minister recently after the post was vacant for more than two weeks, said he would only approach Beijing and other creditors including private bondholders for restructuring talks once an IMF deal has been agreed, according to Financial Times.