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Wednesday, 08 February 2023 05:40

China agrees to attend roundtable discussion on Sri Lanka debt issue Featured

China’s high-level state finance official team is to attend a roundtable meeting with other creditors and several donor countries are to discuss Sri Lanka’s debt restructuring process this month in India.

The aim is to arrive at a consensus on the assurance which will have to be conveyed to the International Monetary Fund acceptable to all including the IMF, official sources confirmed

China’s finance minister and its central bank governor will attend a roundtable meeting with other creditors and some borrowing countries in February in India, IMF Managing Director Kristalina Georgieva said in a CBS 60 Minutes interview on Sunday.

“China has to change its policies because low income countries cannot pay,” she said.

“What we are working towards is to bring all creditors, the traditional creditors from advanced economies, new creditors like China, Saudi Arabia, India, as well as the private sector, and put them around the table with the debtor countries.”

Georgieva said last month the first such gathering will take place on the sidelines of a meeting of Group of 20 finance officials in India.

Georgieva, the first person from an emerging market economy to head the International Monetary Fund, has said debt relief was critical for heavily indebted nations to avoid cuts in social services and other repercussions.

“China is going to participate at the level of minister of finance and the governor of People’s Bank of China,” she told 60 Minutes.

China's Foreign Ministry Spokesperson Mao Ning says , the Export-Import Bank of China will provide an extension on the debt service to Sri Lanka due in 2022 and 2023.

Sri Lanka will not have to repay the principal and interest due on the Bank’s loans during the above-mentioned period, so as to help relieve Sri Lanka’s short-term debt repayment pressure, she explained.

But this was inadequate to fulfill debt restructuring minimum requirement of five year moratorium and and a reasonable haircut.

Meanwhile, s Mao Ning said the Bank would like to have friendly consultations with Sri Lanka regarding medium- and long-term debt treatment in this window period and the Bank will make best efforts to contribute to the debt sustainability of Sri Lanka.

The Bank also noted that it will support Sri Lanka in its loan application to the IMF while continuously in touch with commercial creditors (including the International Sovereign Bondholders) to provide debt treatment in an equally comparable manner, and encourage multilateral creditors to do their utmost to make corresponding contributions.


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