Washington: Although some estimates put Sri Lanka's debt to China at almost twice that amount, it is at least $5 billion. According to the International Monetary Fund, India has also loaned it $3.8 billion, Japan is owed at least $3.5 billion, and other wealthy nations owe it another $1 billion.
According to US Treasury Secretary Janet Yellen, China is a "very important" creditor of Sri Lanka, and participating in a debt restructuring with China would likely be in both nations' best interests. Yellen stated that she would encourage the other G-20 major economy members to put pressure on China to cooperate more in the long-stalled efforts to restructure the debts of debt-stricken nations like Sri Lanka.
Although some estimates put Sri Lanka's debt to China at almost twice that amount, it is at least $5 billion. According to the International Monetary Fund, India has also loaned it $3.8 billion, Japan is owed at least $3.5 billion, and other wealthy nations owe it another $1 billion.
It's my hope that China will be willing to work with Sri Lanka to restructure the debt, Yellen said at a news conference outside of a gathering of G20 finance officials on the Indonesian island of Bali. "Sri Lanka is clearly unable to repay that debt," she said.
She refrained from commenting on recent events in Sri Lanka, where people are waiting for President Gotabaya Rajapaksa to step down after fleeing the nation amid a popular uprising and an economic crisis.
After years of significant government tax cuts and borrowing by the government, along with the negative effects of the Covid-19 pandemic, Sri Lanka defaulted on its $51 billion in international debt in May.
The Rajapaksa administration's significant tax cuts drained the country's coffers in 2019, which led to the economy of the 22 million-person nation to start to show cracks.
Following the collapse of the lucrative tourism sector due to the pandemic, Colombo is now having difficulty affording basic necessities like food, medicine, and fuel due to rising global prices.
Earlier this week, Yellen told reporters that it was "quite frustrating" that China was not doing more to address its debt problems and emphasised the need for better coordination among the various Chinese lenders to developing countries.
In order to help the IMF continue making zero-interest loans to the world's poorest economies, Washington will also give the Poverty Reduction and Growth Trust a grant of $70 million, according to Yellen.
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