Sri Lanka President Ranil Wickremesinghe

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Debt Restructuring Talks With India Were 'Successful': Sri Lanka President

Sri Lanka has suspended repaying its $51 billion foreign debt.(File)

Colombo:

Forex-starved Sri Lanka has held “successful” talks with India on debt restructuring and it will also begin discussions with China, President Ranil Wickremesinghe has said, as the island nation scrambles to get assurances from major bilateral creditors to close a crucial deal with the IMF.

Sri Lanka, which is trying to secure a $2.9 billion bridge loan from the International Monetary Fund (IMF), is also looking at financial assurances from its major creditors — China, Japan and India — which is the requisite for Colombo to get the bailout package.

“We have initiated discussions with our bilateral creditors. Had very successful talks with India, and will also begin talks with China,” Ranil Wickremesinghe said during the inaugural session of the Sri Lanka Economic Summit 2022 on Monday.

Sri Lanka has large debt rollover volumes (Gross Financing Need) running up to 37 per cent of GDP in 2022, which the IMF wants to bring down, according to the EconomyNext news portal.

The exact GFN target is not known, but other countries under restructuring have levels around 15 per cent, and some less, it said.

China, however, continues to be ambivalent about its stand on loans to Sri Lanka as it is set for talks with the IMF for debt restructuring of several recipient countries of Chinese finances, which are defaulting on their external debt.

Sri Lanka, which went bankrupt earlier this year, had announced a default on over $51 billion in foreign loans, including that of China.

China has also announced assistance of 500 million RMB (about $74 million) for the supply of essential goods, but it remained silent about former Lanka president Gotabaya Rajapaksa’s request to defer the loan repayment.

When asked about its stand during talks with the IMF to restructure Chinese loans to Sri Lanka, Chinese Foreign Ministry spokesperson, Mao Ning reiterated Beijing’s stand that it supports financial institutions to solve Colombo’s financial crisis.

“On Sri Lanka’s debt issue, I would like to stress that China attaches high importance to Sri Lanka’s difficulties and challenges,” she told a media briefing here on Monday.

“We support the financial institutions in working out ways with Sri Lanka to properly solve the issue. We also hope relevant countries and international financial institutions will work with China and continue to play a constructive role in helping Sri Lanka overcome the current difficulties, ease its debt burden and realise sustainable development,” she added.

India has rushed about $4 billion in assistance in the form of line credit and other modes to help Sri Lanka this year, which has virtually declared insolvency and defaulted on all foreign loans.

In November, Sri Lanka said it held a “productive” second round of crucial talks with its bilateral creditors.

Sri Lanka is going through its worst economic crisis since its independence in 1948, triggered by a severe paucity of foreign exchange reserves.

In mid-April, Sri Lanka declared its international debt default due to the forex crisis.

The Sri Lankan government in May appointed international legal and debt advisors for debt restructuring after the country declared its international debt default for the first time in history.

Sri Lanka is nearly bankrupt and has suspended repaying its $51 billion foreign debt, of which it must repay $28 billion by 2027.

Sri Lanka, a country of 22 million people, plunged into financial and political turmoil earlier this year as it faced a shortage of foreign currencies.

Due to this, the country has been unable to afford key imports, including fuel, fertilisers and medicine, leading to serpentine queues

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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