BEIJING (AFP): President Xi Jinping told his Sri Lankan counterpart on Friday that China would look to deepen “mutual trust” with Colombo, which is working to recover from its worst-ever economic crisis.
Sri Lanka defaulted on its $46 billion debt last year, at a time when months of food and fuel shortages were making life a misery for the island nation’s 22 million people.
China is Sri Lanka’s biggest creditor and must give its approval for any proposal by Colombo to restructure its debt.
Last week, the Sri Lankan deputy finance minister said the state-owned Export-Import Bank of China had given its green light for a reorganisation of the country’s finances.
Xi and Ranil Wickremesinghe held talks on Friday in Beijing after China hosted 130 government representatives for a forum of its vast Belt and Road trade and infrastructure initiative.
“Under (your) leadership, Sri Lanka has gone through its most difficult period, and its economy and society have resumed orderly development,” Xi said, according to state broadcaster CCTV.
“I am willing to work with (you) to consolidate political mutual trust between our two sides (and) jointly build a high-quality Belt and Road,” he added.
Xi said Beijing was ready to “promote a China-Sri Lanka strategic cooperative partnership built on sincere mutual assistance and everlasting friendship, to continuously achieve new progress”.
The International Monetary Fund said on Thursday that it had reached agreement with Colombo to disburse the second tranche of a $3 billion loan to aid the country’s recovery.
IMF and Sri Lanka reach agreement for $330m disbursal
The IMF said Thursday it has reached agreement with Sri Lanka to disburse the second tranche of a $3 billion loan to aid the country’s recovery from its worst-ever economic crisis.
The recommendation to make roughly $330 million available to the South Asian country follows agreement over the first review of the four-year Extended Fund Facility (EFF) agreement it signed up to in March, the International Monetary Fund said in a statement.
The release of the funds is subject to approval by its executive board, it added.
The Sri Lankan government defaulted on its $46 billion debt last year at a time when months of food and fuel shortages were making life a misery for millions of people.
“The authorities remain committed to the ambitious reform agenda under the EFF and their reform efforts have been commendable,” IMF Senior Mission Chief for Sri Lanka, Peter Breuer, and his deputy, Katsiaryna Svirydzenka, said in a statement.
They noted Sri Lanka’s “rapid” disinflation, from 70 percent in September last year to just 1.3 percent by September this year, along with a “significant fiscal adjustment expected by the end of this year.”
Gross international reserves also increased by $1.5 billion between March and June this year, while shortages of essential items have eased, they added.
However, “Despite these early signs of stabilization, full economic recovery is not yet assured” they said.
