Chinese loans: Debt restructuring to commence in earnest after 20th National Congress of CPC
‘Previous govt. printed money excessively’
By Saman Indrajith
The government would start discussions on debt restructuring with China in earnest after the 20th National Congress of the Chinese Communist Party that starts on 16 October, President Ranil Wickremesinghe said yesterday in Parliament.The President added that preliminary discussions with China had already begun. “Japan has agreed to help us negotiate with China. This is a very positive development. China has helped us in times of difficulty in the past. We believe that they will help us in this time of need as well,” he said.
President Wickremesinghe said the government was also holding discussions with India. He had the opportunity to explain the current Sri Lankan situation to Prime Minister Narendra Modi recently.
“Prime Minister Modi has always supported us. During the recent crisis, they helped us greatly. India will help us during the coming revitalisation process,” President Wickremesinghe said.The President said that he had met a large number of Finance Ministers while he was in Manila at the ADB conference. Given that Finance Ministers play a big role in allocating assistance and restructuring debt, it had been a great opportunity to state the case for Sri Lanka, he said.
“We expect to come to a common agreement with our creditors including Japan, India and China.
“Once we reach an agreement with bilateral creditors, we will hold discussions with the London Club, an informal group of private creditors on the international stage. We also wish to come to an agreement o debt restructuring. Once we come to an agreement with bilateral and private creditors, we can get an IMF facility.”
Wickremesinghe said that the ADB had already pledged 500 million dollars to Sri Lanka and once the agreement with the IMF is signed, Sri Lanka could secure bridging finance.
“Given our situation, we can’t obtain commercial loans from the World bank or other lending agencies. Joining hands with the Global Development Conference, we have asked for an opportunity to obtain concessional financial aid,” he said.
The President added that the government was trying to boost tourism, which could bring in much needed remittances in the short term. He added that in the past two years, the previous government hsf printed too much money.
“The previous government printed 13 times more than the 2015-19 government did. However, production did not increase. This was a recipe for inflation. Because of the steps we took, we managed to keep the inflation under 70 percent in September. By the end of the second quarter of 2022, the Ceylon Petroleum Corporation (CPC) has incurred a loss of 1,057 billion, Ceylon Electricity Board (CEB) 251 billion and SriLankan airlines has accumulated 791 million in losses. We can’t make people bear this burden. We will restructure them.”
