Sri Lanka last week repaid $ 130 million of debt repayment due to China, the Daily FT learns. 

Prior to the payment, the Government had explored the willingness on the part of China to accommodate a deferment. 

However, this had been ruled out by China on the basis that others too would seek a deferment thereby triggering complications. 

The repayment is among nearly $ 7 billion of foreign debt liability this year. Sources said that $ 130 million due to China was another test that international financiers had placed on Sri Lanka’s debt repayment capacity as in the case of $ 500 million worth of International Sovereign Bonds (ISBs) that were due in January. The next big challenge is the $ 1 billion of ISBs due in July. 

Of Sri Lanka’s outstanding debt stock, China’s share is estimated at 13% behind ISBs, those due to multilateral financial institutions and Japan.

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