WEB DESK
China on Friday called on the International Monetary Fund (IMF) to consider the urgency facing Sri Lanka and offer debt support as soon as possible to relieve the liquidity strain facing the island nation. Responding to US criticism that China has not provided credible assurances to Sri Lanka, Chinese Foreign Ministry Spokesperson Mao Ning said that Export-Import Bank of China has already provided Sri Lanka with a letter to express support for its debt sustainability. However, she refused to comment if IMF has confirmed Chinese assurances to Sri Lanka as credible and sufficient. According to media reports, IMF has not yet provided any hint on where it stands regarding China’s assurances to Sri Lanka.
United States – the largest IMF member – on Wednesday criticized China for not offering enough support and assurances to Sri Lanka. “What China has offered so far is not enough. We need to see credible and specific assurances that they will meet the IMF standard of debt relief,” U.S. Under Secretary of State for Political Affairs Victoria Nuland told reporters in Colombo. According to media reports, the IMF needs more assurances from China to secure IMF board approval for the USD 2.9 billion bailout package for Sri Lanka.
Responding to a question by Prasar Bharati Beijing on Nuland’s comment, Mao Ning said that “what was said by the US side does not reflect the truth.” “Rather than jabbing fingers at China’s close cooperation with Sri Lanka, the US might as well show some sincerity and actually do something to help Sri Lanka weather through the current difficulties,” she retaliated at the regular press briefing in Beijing on Thursday.
“On 19th January 2023, the EXIM bank of China as the bilateral official creditor has presented a financing supporting document to Sri Lanka’s Ministry of finance. It said that it would like to provide an extension on debt service to it in 2022 and 2023 and Sri Lanka will not have to repay the principal interest of the bank loan during the period. It is aimed to give Sri Lanka relief in short term debt repayment pressure,” Mao Ning reiterated on Friday in a detailed response to a question by a local media.
“And in this window period, it would like to have consultation with SL over the medium and long-term debt treatment to help it achieve debt sustainability. The bank also said that it supports the country’s efforts to secure a loan from the IMF and would help Sri Lanka to continuously call on the commercial creditors to provide debt treatment in equally and comparable manner and encourage multilateral creditors to do their utmost to make corresponding contribution,” she added.
“As a true friend and a friendly neighbour of SL, China has been doing its utmost for Sri Lanka’s socio-economic development. And this document provided by the EXIM bank of China is aimed at taking comprehensive measures incl. immediate contingency measures and medium to long term debt treatment,” she said.
“China calls on all other creditors of Sri Lanka especially multilateral creditors to take similar measures and offer effective and firm support to Sri Lanka. Going forward China will continue to support the relevant financial institutions to consult with Sri Lanka over debt treatment and work with relevant countries and international financial institutions to help Sri Lanka overcome the current difficulties,” she said.
China, Japan and India are the largest bilateral lenders to Sri Lanka. Media reports quoting the IMF’s research director, Pierre-Olivier Gournichas, said the debt relief provided by India as a “good development” because it’s “consistent with helping the country restore its debt sustainability”. However, IMF has not yet provided any hint on where it stands regarding China’s assurances to Sri Lanka.
The island nation, which is grappling with soaring inflation, a recession and currency depreciation, entered into a staff level agreement with the IMF last September. But it needs financing assurances from key bilateral lenders before the fund’s executive board approves the USD 2.9 billion bailout package.