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Sri Lanka in talks with China for US$2.5 billion credit support
21 Mar, 2022
China is considering offering a US$1.5 billion credit facility to Sri Lanka and a decision is expected soon, a top Chinese official said on Monday (Mar 21), as part of efforts to help the island nation amid its worst economic crisis in decades.
The Chinese Ambassador to Sri Lanka Qi Zhenhong told reporters the two sides were also discussing a separate loan of up to US$1 billion which the Sri Lankan Government had requested.
He added that the South Asian nation was offered a loan of US$500 million from the China Development Bank on Mar 18.
Sri Lanka has to repay about US$4 billion worth of debt this year, including a US$1 billion international sovereign bond maturing in July. But its reserves dipped to US$2.31 billion as of end February, down around 70 per cent from two years ago.
The country is also struggling to make payments for imports of essentials such as fuel and medicines and enforcing nationwide power cuts due to a lack of fuel for power generation.
“We believe our ultimate goal is to solve the problem but there may be different ways to do so,” Qi said in response to questions on possible restructuring of the Chinese loans.
China is Sri Lanka’s fourth biggest lender, behind international financial markets, the Asian Development Bank and Japan. (Courtesy Reuters)
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