Amidst financial crisis, Sri Lanka seeks Chinese help to restructure loan repayments
text_fieldsSri Lankan President Gotabaya Rajapaksa and Chinese Foreign Minister Wang Yi in Colombo (Photo courtesy: BCC)
New Delhi: Amidst reports of Sri Lanka's worsening debt burden of the country chiefly to China, President Gotabaya Rajapaksa has requested China to restructure the repayments in an attempt to salvage the economy from the financial crisis.
BBC reported that Rajapaksa made this request during a meeting with Chinese Foreign Minister Wang Yi on Sunday.
In the last decade, China has extended a loan of over $5 billion for projects including roads, an airport and ports in the island nation.
As in several other developing countries in Asia and Afria, China is Sri Lanka's fourth biggest lender, behind international financial markets, the Asian Development Bank and Japan. But critics blame the government for using the so borrowed funds for non-essential schemes with low returns.
"The President pointed out that it would be a great relief to the country if attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the Covid-19 pandemic," Rajapksa's office said in a statement.
The statement also said China was asked to provide "concessional" terms for its exports to Sri Lanka, which amounted to around $3.5 billion last year, without providing further details, the report added.
Rajapaksa also offered to allow Chinese tourists to return to Sri Lanka provided they adhere to strict coronavirus regulations.
Before the pandemic, China was Sri Lanka's main source of tourists and it imports goods from the Asian giant more than from any other country.
In recent months, Sri Lanka's already crisis-ridden economy with rising debt and foreign exchange shortage, has been affected by falling tourist income during the pandemic, the BBC report added. The crisis is feared to take a worse turn with the prospect of being unable to repay loans as scheduled.
Sri Lanka has to repay about $4.5 billion in debt this year starting with a $500 million international sovereign bond, which matures on January 18.