• China informed of IMF expectations

The Sri Lankan Government has informed the Chinese Government of the expectations of the International Monetary Fund (IMF) from Sri Lanka’s key bilateral creditors in order to proceed with Sri Lanka’s planned Extended Fund Facility (EFF) with the fund, The Sunday Morning learns.

A highly-placed Government source told The Sunday Morning that the Government had last week conveyed to the Chinese envoy in Sri Lanka of the IMF’s expectation from China in relation to the country’s support to Sri Lanka’s debt restructuring programme.

“We (the Sri Lankan Government) have conveyed to the Chinese Government through the Chinese envoy in Colombo about the IMF’s expectation, especially on the wording, in relation to the country’s support for Sri Lanka’s debt restructuring programme,” the source explained.

It is also learnt that the Chinese Government has informed the Sri Lankan Government that China’s recent commitment of a two-year debt moratorium is the best China could offer.

Meanwhile, Chinese Foreign Ministry Spokesperson Mao Ning, in response to statements of China’s ‘insufficient’ support to Sri Lanka’s debt restructuring programme, said during a press conference on Friday (3) that the Export-Import Bank of China, as the official bilateral creditor, had provided a financing support document to the Ministry of Finance, Economic Stabilisation, and National Policies of Sri Lanka, saying the bank was going to provide an extension on the debt service due in 2022 and 2023, which means Sri Lanka would not have to repay the principal and interest due of the bank’s loans during the above-mentioned period, so as to help relieve Sri Lanka’s short-term debt repayment pressure. Meanwhile, 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 of Sri Lanka.

“China calls on all other creditors of Sri Lanka, especially multilateral creditors, to take synchronised, similar steps and give effective, strong support to Sri Lanka to help the country emerge from its default status at an early date and eventually work out an arrangement for Sri Lanka to achieve medium- and long-term debt sustainability. China also calls 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,” Ning further stated.