EXIM Bank reaches tentative agreement with Sri Lanka A breakthrough in debt-burden sharing

• President to visit China on October 15   
• no exact details on the criterion for other creditor nations to comment on

By Kelum Bandara   

In what appears to be a positive development in Sri Lanka’s debt restructuring process, the Export-Import Bank of China which is authorized by the Chinese government to negotiate with Sri Lanka on debt restructuring has reached a tentative agreement on what it called the debt treatment, a spokesperson said. It happened at a time when the other creditor nations insisted that Sri Lanka should adopt an even-handed approach in sharing its debt burden with all the creditors.  

Right from the beginning, China maintained an approach that is different to the criterion promoted by the other creditors. Now, the tentative agreement has been reached triggering hopes for a possible positive outcome. It is yet too early to be complacent since no exact details have been fleshed out on the criterion for other creditor nations - Paris Club of creditors - to comment on.  
The spokesperson for the Chinese Foreign Ministry announced it yesterday in Beijing in response to a question during a regular media briefing. He said China is ready to work with the relevant countries and international financial institutions to play a positive role in helping ease Sri Lanka’s debt burden.   

“We call on multilateral institutions and commercial creditors to also take part in the debt restructuring for fair burden-sharing,” he said according to a post on his X account formerly known as Twitter.   

The announcement comes ahead of President Ranil Wickremesinghe’s visit to China on October 15 to attend the Belt and Road Initiative (BRI) summit. On the sidelines of the event, the President is slated to hold bilateral talks with Chinese President Xi Jinping on a host of matters including debt treatment.   

China is the largest bilateral creditor to Sri Lanka. India, Japan and France are among the other key creditors. These three countries have formed a common platform of the Paris Club creditors in restructuring Sri Lanka’s debt.     

• Multilateral institutions and commercial creditors also called to take part in debt restructuring for fair burden-sharing
• India, Japan and France are among the other key creditors