As part of efforts to help the South Asian country navigate its worsening financial situation, Sri Lankan President Gotabaya Rajapaksa has asked China to restructure the island nation's debt repayments.
During a meeting with Chinese Foreign Minister Wang Yi on Sunday, Rajapaksa made the request. China has lent Sri Lanka over $5 billion for projects such as roads, airports, and ports over the last decade. After international financial markets, the Asian Development Bank, and Japan, China is Sri Lanka's fourth largest lender. However, critics claim that the funds were spent on ineffective schemes with low returns.
"The President stated that restructuring the loan repayments as a remedy to the economic situation that has developed in the face of the Covid-19 outbreak would be a big relief to the country," Rajapksa's office said in a statement. According to the report, China was also urged to give "concessional" conditions for its exports to Sri Lanka, which totalled roughly $3.5 billion last year, but no additional specifics were provided in the statement.
Rajapaksa further stated that Chinese visitors will be allowed to return to Sri Lanka if they followed tight coronavirus laws. Prior to the pandemic, China was Sri Lanka's primary supplier of visitors, and the nation imports more goods from China than any other country.
Sri Lanka has been dealing with a severe debt and foreign exchange problem in recent months, which has been worsened by the loss of tourist income due to the epidemic, according to a BBC report. The country has received billions of dollars in soft loans from China, but it has been caught in a foreign exchange crisis, which some analysts say has brought it to the brink of default.
Sri Lanka has $4.5 billion in debt to discharge this year, beginning with a $500 million foreign sovereign bond due on January 18.
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