Category: News

BEIJING: China on Tuesday reiterated that it is doing its “utmost” to provide assistance to debt-ridden Sri Lanka, even as Beijing maintained a steady silence on Colombo’s request for debt rescheduling as well as extending the promised $2.5 billion assistance.

Saddled with a huge forex crisis, Sri Lanka on Tuesday suspended servicing external public debt pending the completion of its discussions with the International Monetary Fund (IMF) and the preparation of a comprehensive debt restructuring program covering the obligations.

The policy shall be in effect for all international bonds, all bilateral loans excluding swaps between the Central Bank and a foreign central bank, all loans with commercial banks and institutional lenders, the Sri Lanka finance ministry said.

Asked about the reported request of Sri Lanka to China for monetary help to tide over the present crisis, Chinese foreign ministry spokesman Zhao Lijian on Tuesday reiterated his ministry’s previous remarks that China has been doing its utmost for Sri Lanka and will continue to do so.

“Since the establishment of diplomatic ties between China and Sri Lanka, the two countries have lent mutual support and understanding to each other,” Zhao told a media briefing here.
“China has been doing its utmost to provide assistance for the socio-economic development of SL and we will continue to do so going forward,” he said, reiterating what his ministry said on March 9.

Last month China acceded to Pakistan’s request to rollover $4.2 billion debt repayment to provide a major relief for its all-weather ally, which is reeling under major economic crisis.

Though there was no official announcement, the then Pakistan foreign minister Shah Mahmood Qureshi said this after talks with his Chinese counterpart Wang Yi during his visit to China on March 30.

Beijing is yet to react to last December’s request by Sri Lankan President Gotabaya Rajapaksa to reschedule debt owed by his country to China.

China is also silent on last month’s announcement by Chinese ambassador Qi Zhenhong that China is considering a $2.5 billion credit facility to Sri Lanka.

Qi’s announcement came close on the heels of an announcement by India to extend $1 billion line of credit to Sri Lanka as part of its financial assistance to help the country deal with the economic crisis.

India had extended a $500 million line of credit to Sri Lanka in February to help it purchase petroleum products.

“Sri Lanka has asked for $2.5 billion that includes a $1.5 billion buyer’s credit. It (the request) is under consideration,” Qi told reporters here.

“Both the countries now have to discuss how the loan and buyer’s credit will be used,” he added.

Qi, however, did not give any direct answer to questions on whether China would be restructuring the debt owed by Sri Lanka.

In his meeting with Chinese foreign minister Wang Yi in December in Colombo, Rajapaksa raised Sri Lanka’s deepening forex crisis and spiralling external debt and sought Beijing’s assistance.
Rajapaksa pointed out that it would be a great relief to Sri Lanka if attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of COVID-19 pandemic.

It is estimated that Sri Lanka owes debt payments to China in the region of USD 1.5 to 2 billion this year. Over all China’s loans and investments in Sri Lanka was estimated to be more than $8 billion in the last few years.

China’s takeover of the Hambantota port on 99 years’ lease for $1.2 billion debt swap drew international concerns over Beijing acquiring strategic assets far away from home by providing heavy loans and investment to smaller nations.

The Hambantota port together with Colombo port city project, where China is building a new city with reclaimed land in the sea, were viewed with concern, especially in India as Beijing solidified its footing in Sri Lanka, strategically located in the Indian Ocean.

Source:TOI

COLOMBO: Crisis-stricken Sri Lanka defaulted on its $51 billion external debt on Tuesday, calling the move a “last resort” after running out of foreign exchange to import desperately needed goods.

The island nation is grappling with its worst economic downturn since independence, with regular blackouts and acute shortages of food and fuel.

Sri Lanka’s finance ministry said in a statement that creditors, including foreign governments, were free to capitalise any interest payments due to them from Tuesday or opt for payback in Sri Lankan rupees.

“The government is taking the emergency measure only as a last resort in order to prevent further deterioration of the republic’s financial position,” the statement said.

It added that the immediate debt default was to ensure “fair and equitable treatment of all creditors” ahead of an International Monetary Fund assisted recovery programme for the South Asian nation.

The crisis has caused widespread misery for Sri Lanka’s 22 million people and led to weeks of anti-government protests.

International rating agencies had downgraded Sri Lanka last year, effectively blocking the country from accessing foreign capital markets to raise much-needed loans to finance imports.
Sri Lanka had sought debt relief from India and China, but both countries instead offered more credit lines to buy commodities from them.

Amarapura Sect Chief Sanghanayake Ven. Omalpe Sobhitha Thera showed his solidarity with protestors at the newly-established village dubbed “Gota-Go-Gama” at the Agitation Site near Galle Face, by joining the protest being staged against the President and the Government, along with a group of monks.

The group of monks handed over a petition with their demands to the Police officers deployed on security duty at the entrance of the Presidential Secretariat, as they were denied entrance to the premises.

Ven. Omalpe Sobhitha Thera urged the Government to implement the proposals put forth by the Mahanayake Thera.

Protestors, who have occupied Galle Face and its surroundings since Saturday (9), in a massive protest against the President and the current Government, have set up a camp in the Agitation Site close to the Presidential Secretariat dubbed “Gota-Go-Gama”, with dozens of tents.

“Gota-Go-Gama” offers free food, water, toilets, and a makeshift medical camp for health emergencies, through the support of protestors.

In what may have been the largest crowd witnessed at a protest not organised by a political party or a trade union in recent decades in Sri Lanka, tens of thousands of people converged on Galle Face and its surrounding areas on Saturday (9) to demand the resignation of President Gotabaya Rajapaksa, increasing the pressure on the Government and the President himself.

Estimates of the attendance ranged from 100,000 to over 500,000, although no official count is available. The protestors were seen still standing outside the Presidential Secretariat yesterday (12), having commenced the protest on Saturday (9) morning. As the day went on, the protestors who had left returned to the site to boost the numbers.

Protestors have vowed to continue their protests until their demands are met. However, Chief Government Whip Johnston Fernando stated in Parliament that the President would not be resigning under any circumstances.

Following protests staged by people outside the Sri Lanka Freedom Party (SLFP) headquarters on Darley Road, Colombo 10, the parliamentary group of the SLFP boycotted the second round of discussions with President Gotabaya Rajapaksa scheduled to be held yesterday (12) to discuss the possibility of the formation of an Interim Government.

SLFP National Organiser MP Duminda Dissanayake said that the decision to boycott yesterday’s meeting was taken in protest over the issue that two MPs from their group, representing the SLFP, still serve in State Ministerial portfolios in the Government.

The protestors outside the headquarters expressed their anger and agitation about MP Shantha Bandara accepting the portfolio of State Minister of Promoting the Production and Regulating the Supply of Organic Fertiliser on 11 April from President Gotabaya Rajapaksa, replacing Shasheendra Rajapaksa.

The main demand of the protestors was to not “provide oxygen” to the Rajapaksa family or the Government by joining forces with the Sri Lanka Podujana Peramuna (SLPP). Following the protests, addressing a District Representatives’ meeting of the SLFP at the same venue, SLFP Leader and former President Maithripala Sirisena and the party’s General Secretary Dayasiri Jayasekera both stated that it would not support a Government which includes the Rajapaksas, mainly referring to the fact that Prime Minister Mahinda Rajapaksa could not remain as PM in any interim Government. However, there was no insistence on the resignation of President Gotabaya Rajapaksa, which has been the primary demand of protestors islandwide.

The SLFP MPs recently decided to sit independently in the Parliament.

MP Shantha Bandara accepted the portfolio of State Minister of Promoting the Production and Regulating the Supply of Organic Fertiliser on 11 April, replacing Shasheendra Rajapaksa who resigned, despite the SLFP Parliamentary group’s departure from the ruling SLPP, and its decision to sit independently in the Parliament and not accept Ministerial posts.

Meanwhile, it is reported that President Rajapaksa has refused to accept the resignation of MP Piyankara Jayaratne as the State Minister of Foreign Employment Promotion and Market Diversification.

Sri Lanka’s top diplomat in Beijing said he’s very confident that China will come through on $2.5 billion in financial support as the island nation’s inflation-driven crisis becomes more dire.

Ambassador Palitha Kohona said that he’d received reassurances as recently as last week from authorities in China that arrangements for loans and credit lines were progressing. Sri Lanka is looking to borrow $1 billion from Beijing so that it can repay existing Chinese loans due in July, as well as a $1.5 billion credit line to purchase goods from the world’s No. 2 economy such as textiles needed to support the apparel export industry, he said.

“For us, it can’t come any sooner,” Kohona said, adding that it could be a matter of weeks. He wasn’t able to give a precise timeframe, and didn’t disclose the terms of the funding.

“Given the current circumstances, there aren’t that many countries that can step out to the pitch and do something,” he said. “China is one of those countries that can do something very quickly.”

Sri Lanka is embroiled in its worst economic crisis in decades, as consumer prices rose the fastest in Asia at about 19% last month. Soaring costs, widespread power outages, and shortages of food and medicine have fueled street protests and left President Gotabaya Rajapaksa with a minority in parliament.

Beijing has long enjoyed warm relations with Colombo but has yet to deliver a much needed lifeline to Sri Lanka. Rajapaksa had recently written to Chinese President Xi Jinping directly to seek credit support, Kohana said, and Sri Lanka officials are still encouraging Beijing to address the issue as soon as possible.

“Our request will be honored, but they have to go through the Chinese system,” he said. “We are very confident that sooner than later, these two facilities will be made available to us.”

Kohana said that Sri Lanka had also sought China’s help to buy items such as fuel that it was struggling to secure because of the nation’s foreign-currency shortage. He said he was unsure whether China could provide such support, given that it is a net importer of such goods.

Separately, Sri Lankan officials will meet with counterparts from the International Monetary Fund later this week to iron out details of a potential financial package to help it meet $8.6 billion worth of debt payment due this year. Kohana said he was hopeful to secure Chinese support that would enhance its chances for closing the deal.

“Given the nature of our relationship — this very close and warm relationship — and Sri Lanka’s dire situation, I would say that I am confident that China will respond positively to our request,” Kohona said of his nation’s overall efforts to secure funding from Beijing.