China has already offered Sri Lanka debt extension – Foreign Ministry

(LANKAPUVATH | COLOMBO) – The Export-Import Bank of China has already provided Sri Lanka with a letter to express support for its debt sustainability, China’s Foreign Ministry said on Monday.

Foreign Ministry Spokesperson Wang Wenbin at the Regular Press Conference on Monday said the Exim Bank in its letter says that the Bank will provide an extension on the debt service due in 2022 and 2023.

During the period, Sri Lanka will not have to repay the principal and interest due of the Bank’s loans, so as to help relieve Sri Lanka’s short-term debt repayment pressure, the official said.

Foreign Ministry Spokesperson added that the Exim Bank would like to have friendly consultation with Sri Lanka regarding medium- and long-term debt treatment in this window period.

“The Bank will make best efforts to contribute to the debt sustainability of Sri Lanka,” he said adding that the Bank also has noted that it will support Sri Lanka in its loan application to the IMF.

Chinese Foreign Ministry’s clarification comes in response to a media request to the Spokesperson to confirm that China would assure the International Monetary Fund (IMF) that it would help restructure the debt for Sri Lanka as a part of any IMF loans to Sri Lanka following a report that the IMF is considering approving Sri Lanka’s bailout, even without the formal assurance of debt-restructuring support from China.

Explaining further, Mr. Wang said the Exim will continuously call on commercial creditors (including the International Sovereign Bondholders) to provide debt treatment in an equally comparable manner, and encourage multilateral creditors to do their utmost to make corresponding contributions.

“China will continue to support relevant financial institutions in actively working out the debt treatment. We will work with relevant countries and international financial institutions to jointly play a positive role in helping Sri Lanka navigate the situation, ease its debt burden and achieve sustainable development,” Mr. Wang asserted.

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