Consensus emerging on Sri Lanka debt resolution after IMF meets China

Monday, 12 December 2022 00:52 - - {{hitsCtrl.values.hits}}

IMF Managing Director Kristalina Georgieva with China Premier Li Keqiang during their meeting last week in Huangshan, China

Sri Lanka’s arduous road ahead for external debt restructuring saw some progress last week with the International Monetary Fund (IMF), requesting China to play its part and the biggest bilateral lender indicating willingness.

In a statement following the fruitful meeting with China’s Premier Li Keqiang and following the Seventh “1+6” Roundtable in China, IMF Managing Director Kristalina Georgieva said several issues concerning the need to reduce the risk of debt crises were discussed.

“We need to build on the momentum of the agreement on Chad's debt treatment and accelerate and finalise the debt treatments for Zambia and Sri Lanka, which would allow for disbursements from the IMF and multilateral development banks,” Georgieva said.

With $ 7.3 billion, China is Sri Lanka's biggest bilateral creditor accounting for 52% of the total worth $ 14 billion.

“We are also seeing new cases that are coming in this time of tightening global financial conditions. We talked about how we can prevent individual cases of debt distress from triggering a global debt crisis. The application of the G20 framework must become much faster and more predictable, and it needs to reach a broader set of countries. We also see space for a platform for more systematic engagement on debt issues, where China can play an active role,” she added.

China said all parties expressed that they would give full play to their respective advantages in the future, and continue to strengthen coordination and cooperation in related fields on international development and debt issues of developing countries etc.

“China will implement the G20's Debt Service Suspension Initiative in all respects, and work with relevant G20 members to formulate and participate in a fair and equitable debt-restructuring plan,” said Li Keqiang in a tweet.

Separately, the presidents of China Exim Bank and China Development Bank co-hosted a working dinner last week for the visiting IMF Managing Director and World Bank Group President David Malpass. “They had a positive discussion on int'l economic situation and the debt of developing countries including Sri Lanka,” China said.