China said on Wednesday that it would “play a positive role” in helping bankrupt Sri Lanka get through its debt crisis after agreeing to restructure its loans.
An unprecedented economic crisis has seen Sri Lanka’s 22 million people suffer acute food, fuel and medicine shortages, along with extended blackouts and runaway inflation.
“China is ready to work with relevant countries and international financial institutions to play a positive role in helping Sri Lanka cope with its current difficulties, ease its debt burden and achieve sustainable development,” foreign ministry spokesperson Mao Ning said at a regular briefing.
“The Export-Import Bank of China, as the official bilateral creditor, issued a financial assurance letter to Sri Lanka on March 6,” she said when asked about President Ranil Wickremesinghe’s Tuesday statement that Beijing had agreed to help.
China, Mao added, “supports relevant financial institutions in actively discussing debt disposal plans with the Sri Lankan side”.
Wickremesinghe’s government has been working to repair Sri Lanka’s ruined finances and secure a sorely needed IMF rescue package.
But it was held up by debt negotiations with China, Sri Lanka’s largest bilateral creditor.
Beijing’s confirmation that it would help clears the final obstacle to a long-awaited International Monetary Fund bailout.
“Sri Lanka has now received financing assurances from all major bilateral creditors,” Krishna Srinivasan, director of the IMF‘s Asia and Pacific Department, said Tuesday.