Sri Lankan envoy confident China will provide debt relief

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Sri Lanka’s Ambassador to China Palitha Kohona said he’s very confident that China will come through on USD 2.5 billion in financial support as the island nation’s inflation-driven crisis becomes direr.

The Ambassador, speaking to Bloomberg, said that he’d received reassurances as recently as last week from authorities in China that arrangements for loans and credit lines were progressing.

Sri Lanka is looking to borrow USD 1 billion from Beijing so that it can repay existing Chinese loans due in July, as well as a USD 1.5 billion credit line to purchase goods from the world’s No. 2 economy such as textiles needed to support the apparel export industry, he said.

“For us, it can’t come any sooner,” Kohona said, adding that it could be a matter of weeks. He wasn’t able to give a precise timeframe and didn’t disclose the terms of the funding.

“Given the current circumstances, there aren’t that many countries that can step out to the pitch and do something,” he said. “China is one of those countries that can do something very quickly.”

Sri Lanka is embroiled in its worst economic crisis in decades, as consumer prices rose the fastest in Asia at about 19% last month. Soaring costs, widespread power outages, and shortages of food and medicine have fueled street protests and left President Gotabaya Rajapaksa with a minority in parliament.