Sri Lanka-IMF meet affects credit talks with China, envoy Says

Sri Lanka is facing shortages of food, fuel and medicines as its foreign reserves dry up and it heads for a default on its international debt.

Sri Lanka’s meeting with the International Monetary Fund for a bailout has impacted ongoing credit talks with Beijing, China’s envoy to the country, Qi Zhenhong, told reporters on Monday.“Sri Lanka going to IMF with a short notice has unavoidably impacted the discussion,” Qi told a briefing, adding that China is closely monitoring the discussion between the country and the multilateral lender. Last month, China had said it was considering a $1 billion loan and a $1.5 billion credit line to purchase goods from China, both of which were new lines of financing.A delegation from Sri Lanka engaged in initial technical discussions with the lender last week for a bailout package to unlock emergency funds needed to ease its worsening economic crisis.“We can’t comment now on a possible loan to Sri Lanka,” Qi said. Sri Lanka is facing shortages of food, fuel and medicines as its foreign reserves dry up and it heads for a default on its international debt. The economic decline in recent weeks has spiraled into a domestic crisis, with protests seeking the ouster of President Gotabaya Rajapaksa. Sri Lanka has about $2 billion of foreign-currency reserves against total debt due this year of as much as $7 billion, including $1 billion of notes maturing in July. It has already drawn down a $1.5 billion swap line provided by China last year, a part of which was used to repay foreign-currency bonds due in January.The island nation had about $3.5 billion in debt from China by end-2020, excluding loans to state enterprises, according to central bank data.  

Subscribe to our best newsletters

Subscribed to newsletter successfully

Thank you for subscribing to our Daily News Capsule newsletter.

Close Story