Terms of China debt deal shared with official creditors’ committee: CB Governor

18 November 2023 07:48 am Views - {{hitsCtrl.values.hits}} 6 Bookmark

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COLOMBO (Daily Mirror) - Sri Lanka is expected to make further headway with regard to restructuring its foreign debt and securing the second tranche of the International Monetary Fund (IMF) loan, as the government has disclosed the terms of the US $ 4.2 billion debt deal with China Exim Bank to the country’s other creditors.

Central Bank Governor Dr. Nandalal Weerasinghe confirmed this key development to Bloomberg this week but refused to disclose the terms of the debt deal to the media.

In an interview with Bloomberg, Dr. Weerasinghe said he hopes the official creditors committee, which is led by Japan, India and the Paris Club of Nations, will move forward in agreeing
to restructure the island nation’s debt.

Following this, the IMF is expected to approve the release of US $ 330 million second tranche of the US $ 3 billion Extended Fund Facility before the end of the year.

Sri Lanka was successful in striking a debt deal with China Exit Bank this October. In a statement to the media, the Finance Ministry expressed confidence in the indicative terms agreed, providing the necessary fiscal space for Sri Lanka to implement its ambitious reform agenda.

While the development was welcome, concerns were raised by other creditors and the IMF on the lack of transparency surrounding the deal.

Sri Lanka’s official creditors’ committee is led by Japan, with the members being India and the Paris Club of Nations. China is not part of this committee.

Sri Lanka defaulted on its debt obligation in April 2022, after the country completely ran out of its reserves, primarily due to the mismanagement of the economy by the government of President Gotabaya Rajapaksa.

Comments - 6

Sokrates Saturday, 18 November 2023 09:05 AM

The people have a right to know what the deal with China is. Since this deal is kept secret, one can assume that horrendous interest rates are involved again and that if the loan is not paid, infrastructure will be handed over to China, such as the port of Hambantota. China is no friend of Sri Lanka and has nothing to give away given its own poor economic situation.

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Hard Truth Saturday, 18 November 2023 12:58 PM

Madinda mahatya is an excellent friend to the Sri Lankan people. He liberated us from the LTTE clutch and will bring it back whenever he wants.

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Reformist Saturday, 18 November 2023 12:05 PM

Secrecy is part and parcel of communist governments and China has no interest in helping SL come out of this mess. SL itself and indeed its lunatic 225, have dug its own grave. After all these, people are yet to see single action against rampant corruption in the country by MPs and public servants. No doubut that the IMF money will go to salary increases of inefficient and bloated public service. Can't really see when the begging bowl is put away.

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Kevin Saturday, 18 November 2023 01:28 PM

External creditors know but the tax payers who funding this are in the dark. Nice one CB Governor.

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Footnote brigade Saturday, 18 November 2023 06:24 PM

The problem is not Chinese loans . It is the ISB holders of the western exploiters who have given loans at high interest and now again trying to get the best return at the restructure. During yahapalanaya regime of RW the country took huge amount of ISB s just for consumption

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People never voted for debt-traps Sunday, 19 November 2023 07:05 AM

One may interpret the situation that the Chinese debt trap counter Indian involvements and vice versa. Shrewd subtle way of handling local politics amid regional and global powers, under immense pressure thanks to Rajapakshas while the two Republics puruse only for their leaders' political glory and survival, leaving the Sri Lankans starve to death.

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