Sri Lanka’s debt scenario China bucks restructuring, stands for management

• Ready to have its own mechanism 
• China does not want to call it debt restructuring even. They want to see it as debt management
• China is anyway sympathetic to Sri Lanka’s cause and ready to support in the exercise
• India, France and Japan have formed a common platform to restructure Sri Lanka’s debts

By Kelum Bandara

In rescheduling Sri Lanka’s external debts, China, as the single largest bilateral creditor, is likely to have its own ‘debt management’ criterion for Sri Lanka instead of having a common mechanism with other creditors, a top source said.   

Sri Lanka is currently in the process of restructuring its debts in keeping with programme with the International Monetary Fund (IMF). India, France and Japan have formed a common platform to restructure Sri Lanka’s debts. China has also taken observer status.   

Finance Ministry Secretary Mahinda Siriwardane visited Beijing recently and held talks with the authorities of EXIM Bank which is authorized to engage with Sri Lanka regarding the debt restructuring process. Before him, Foreign Minister Ali Sabry also held talks with the EXIM bank and other Chinese officials.   

 Also, the President’s Office is in liaison with the Chinese authorities on the process.   

“China does not want to call it debt restructuring even. They want to see it as debt management,” the source said. The source said China is anyway sympathetic to Sri Lanka’s cause and ready to support in the exercise.   
However, other creditor nations insist on equitable approach with all in the whole rescheduling process. Sri Lanka owes Chinese lenders $7.4 billion.