Chinese EXIM Bank offers short, mid, long term measures

EXIM Bank of China (Export-Import Bank) submitted a comprehensive program in its financial support document on January 19 to ‘strongly support’ Sri Lanka’s debt restructuring process with the International Monetary Fund (IMF) and it includes short, mid and long-term measures for debt treatment, a diplomatic source from the Chinese embassy said.

Sri Lanka is seeking the support of all the creditors to unlock the US $ 2.9 billion program with the IMF in four years.

According to the source, it is not just a two -year moratorium on debt repayments. “The two-year moratorium on borrowings is only part of the support to help relieve Sri Lanka’s immediate debt repayment pressure,” the source said.

“The Bank would like to have friendly consultation 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 and the future development of Sri Lanka. Only the short term measure is talked about in the media. It is incomplete and inaccurate,” the source said.

China calls on commercial creditors including the ISB holders to provide debt treatment in an equally comparable manner, and encourage multilateral creditors to do their utmost to make corresponding contributions.

“We also call on the IMF to take into full consideration the urgency of the situation in Sri Lanka and provide loan support as soon as possible to relieve the country’s liquidity strain,” the source said.

EXIM Bank works as the official bilateral creditor representative of China in dealing with the IMF.

Sri Lanka owes US $ 7.4 billion to EXIM Bank and China Development Bank according to the Ministry of Finance.(Kelum Bandara)