Chinese Finance Minister reaffirms support for Sri Lanka’s debt optimising strategy

Chinese Finance Minister Liu Kun has reaffirmed China’s commitment to extend comprehensive support for the implementation of a medium-term and long-term programme that is mutually beneficial to both parties and aimed at optimising Sri Lanka’s debt, a statement from President’s Media Division said.

The Chinese Finance Minister had conveyed this commitment during bilateral discussions held yesterday in Beijing with President Ranil Wickremesinghe, who is currently on a four-day official visit to China.  

Sri Lanka’s Finance Ministry last week said it entered into a “landmark agreement” with Export-Import Bank of China (Exim Bank China) that will help Sri Lanka to arrive at a deal with all its foreign creditors and clear the path for the approval of the first review of the International Monetary (IMF) Fund programme. 

The statement said Sri Lanka has “reached an agreement on the key principles and indicative terms of debt treatment with the Export-Import Bank of China (China Exim Bank).” 

The agreement covers approximately US$ 4.2 billion of outstanding debt, the Finance Ministry said. However, the exact specifics of this agreement have not yet been revealed.

Sri Lanka commenced negotiations with its creditors, including China, Japan, and India in September of last year, in parallel to its efforts to secure the US$ 2.9 billion IMF bailout.

According to the Finance Ministry, Sri Lanka’s total foreign debt as at end-March, 2023 was Rs.36.4 billion.

As at March-end 2023, Sri Lanka owed US$ 4.7 billion to China, US$ 1.74 billion to India, and US$ 2.68 billion to Japan, which is a member of the Paris Club.  Meanwhile, during his discussion with President Wickremesinghe, Minister Liu has assured China’s unwavering commitment to providing robust support for the enhancement of the necessary infrastructure crucial for Sri Lanka’s development.

“President Wickremesinghe expressed his profound appreciation for China’s consistent support as Sri Lanka endeavours to overcome economic challenges,” the PMD statement said.

In attendance during this significant meeting were Minister of Foreign Affairs Ali Sabry, President’s Senior Advisor on National Security and Chief of Staff Sagala Ratnayaka, Central Bank Governor Dr. Nandalal Weerasinghe and President’s Private Secretary Sandra Perera.