SL going to IMF will affect future engagements with China

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China said the Sri Lankan Government’s decision to seek a bailout from the International Monetary Fund (IMF) on such short notice will unavoidably have an influence on future bilateral engagements with China.

“We shall wait and closely monitor how the negotiations are going at the IMF,” Chinese Ambassador to Sri Lanka Qi Zhenhong said yesterday (25) addressing a group of senior journalists.

The US$ 2.8 billion loan facility restructuring is on hold, as Sri Lanka has reached out to the IMF for a maximum US$ 4 billion bailout target.

“China has done its best to support Sri Lanka so far during the crisis, but the suspension of the debt repayment mechanism that is going on with China is very sad to learn.”

Beijing has expressed concerns about the IMF’s limits and preconditions for Sri Lanka. “Despite the fact that debt restructuring is critical for Sri Lanka, it would have a significant influence on China’s future engagement in bilateral negotiations.”

He also said it is too early to speculate on how the IMF talks will affect China, but that they will continue to assist Sri Lanka in whatever way possible, and that Sri Lanka should strive for self-sustainability.

The present discussions with China to revisit and restructure the loan repayment are ongoing with both nations’ financial institutions, according to the Chinese Envoy, however, the Envoy said debt restructuring is very important between SL and IMF.

“China is neither the number one nor the largest lender,” he said emphatically.

However, in his opinion, the objective for Sri Lanka is to overcome its present issues, and that “there is more potential for China and Sri Lanka to work together to overcome the present crisis.”

He added that the long-term goal should be for Sri Lanka to develop in a way that is self-sustaining.

He pointed out, besides China’s US$ 2.8 billion loan facility, and providing 5,000 tonnes of rice, Red Cross of China is preparing to donate US$ 40,000 as an initial contribution.

He said while the sum isn’t the most important factor in determining Beijing’s support for the Nation, the Yunnan Province’s food packages worth Rs 50 million will be transported to Sri Lanka’s Eastern Province.

Other outlets are also working to aid Sri Lankans during this crisis, he added. Another Yuan 100,000 has been collected by elementary schoolchildren for needy schoolchildren in Sri Lanka.

He also recalled a joke made by a former minister, who told the Envoy, “Some Sri Lankan friends have very short memories and they always remember the terrible things and not the positive things, and I believe it is against Buddhism. We must remember the good and be grateful for the assistance we have received.”

The loan request from Sri Lanka is presently being updated.

He also said the China-Sri Lanka Free Trade Agreement (FTA) has resumed, and if executed, it will benefit Sri Lanka’s crisis. “In the future, we should encourage long-term development,” the Envoy said.

By Sulochana Ramiah Mohan