China willing to back Sri Lanka’s debt restructuring process

• Expresses willingness to cooperate with SL’s bilateral creditors and international agencies 
• China remains largest bilateral creditor to Sri Lanka outside Paris Club
• Keeps mum on SL’s inability to tap into US$ 1.5bn swap line with People’s Bank of China

The Chinese government has expressed its willingness to cooperate with Sri Lanka’s bilateral creditors including India and international financial institutions in the country’s debt restructuring process in order to reach a feasible solution expeditiously.

“China is ready to work with relevant countries and international financial institutions to continue to play a positive role in supporting Sri Lanka’s response to current difficulties and efforts to ease debt burden and realise sustainable development,” China’s Foreign Ministry Spokesperson Zhao Lijian told reporters during a press conference on Wednesday.
As China remains the largest bilateral creditor to Sri Lanka outside of Paris Club, foreign experts view that China’s cooperation based on full transparency and openness to be vital in order to avoid a long-drawn negotiation process.

Shortly after Sri Lanka announced the pre-emptive default on its foreign debt, Lijian said Chinese financial institutions reached out to the Sri Lankan government to extend their support.
“Chinese financial institutions reached out to the Sri Lankan side and expressed their readiness to find a proper way to handle the matured debts related to China and help Sri Lanka to overcome the current difficulties. 

We hope Sri Lanka will work actively with China in a similar spirit and work out a feasible solution expeditiously,” he said.

However, he didn’t comment on Sri Lankan government’s remarks on the inability to tap into US$ 1.5 billion swap facility extended by the People’s Bank of China as well as Sri Lanka’s requests for US$ 1 billion loan facility. While praising India’s key role in assisting Sri Lanka during the crisis, he remarked that China is also ready to corporate with India and others to extend support to the country to overcome the current crisis. 

“We have taken note that the Indian government has also done a lot in this regard. We commend those efforts. China is ready to work with India and the rest of the international community to help Sri Lanka and other developing countries experiencing difficulty to pull through the hardship as early as possible,” he said.

Lijian noted that China has already donated medicines and rice to Sri Lanka as a part of a 500 million RMB (US$ 74.75 million) emergency assistance programme.  Further, he stressed that China remains committed to pursue high-quality Belt and Road cooperation in the South Asian Region including Sri Lanka to sustain the sound momentum of security, stability, cooperation and development, which would bring mutual benefits to all stakeholders. However, Lijian emphasised that Sri Lanka should take measures to enhance stability and credibility of the country’s investment and financing environment. “In the meantime, we believe Sri Lanka will boost its own effort, protect the legitimate rights and interests of the investment and financing partners and ensure the stability and credibility of Sri Lanka’s investment and financing environment,” he said.