WEB DESK
Governor of Central Bank of Sri Lanka Nandalal Weerasinghe has urged China and India to agree to a write-down of their loans to the crisis-hit island nation. Mr. Weerasinghe said that quick action would be in the interest of all parties and will help Sri Lanka to start repaying the dues. A formal dialogue on reduction of debt with the creditor nations has not been initiated so far.
Sri Lanka is in negotiations with the International Monetary Fund for a US$ 2.9 billion bailout package which will not materialize until the creditors have agreed to restructure Sri Lanka’s debt. Colombo owes China over 7 billion US dollars which accounts for over 19 percent of its overall external debt.
The governor said that once agreement from bilateral creditors has been agreed the IMF funds could be distributed to Sri Lanka within four to six weeks.
China has been under criticism for not showing interest contrary to its claims of being Sri Lanka’s true friend. At the same time, Chinese projects have been under fire for several quarters for landing the Indian Ocean country into a debt trap. Beijing is reportedly reluctant to write down Sri Lanka’s debt because of possible implications to loans it has extended to other developing countries. However, Paris club nations had last month called for a solution with a debt moratorium of 10 years and another 15 years of restructuring.