China in close communication with Sri Lanka on debt restructuring

By Easwaran Rutnam

China says it is in close communication with Sri Lanka on restructuring its debt.

Responding to a question raised at the regular daily press conference, Chinese Foreign Ministry Spokesperson Wang Wenbin said that China supported Chinese financial institutions in actively discussing debt treatment arrangements with Sri Lanka.

“I would like to reiterate that China calls on commercial and multilateral creditors to jointly participate in Sri Lanka’s debt restructuring under the principle of fair burden-sharing. We have been in close communication with Sri Lanka and supported Chinese financial institutions in actively discussing debt treatment arrangements with Sri Lanka,” he said.

Wang Wenbin said this in response to Sri Lanka and its major creditors formally launching talks to restructure Sri Lanka’s debt, without China, which is Sri Lanka’s biggest bilateral lender.

Japan, India and France, this week, announced a common platform for talks among bilateral creditors to coordinate restructuring of Sri Lanka’s debt, a move they hope would serve as a model for solving the debt woes of middle-income economies.

It remains uncertain, however, whether Sri Lanka’s biggest bilateral creditor – China – will join the initiative launched by Japan, this year’s G7 chair, with the aim of kicking off a series of meetings among Sri Lanka’s creditors.

“To be able to launch this negotiation process gathering such a broad-based group of creditors is a historical outcome,” Japanese Finance Minister Shunichi Suzuki had said.

Japan’s top currency diplomat Masato Kanda told reporters the group has sent an invitation to all of Sri Lanka’s bilateral creditors, including China, and hopes to hold the first round of talks at the earliest date possible. (Colombo Gazette)