Sri Lanka wants to borrow money from China to repay… China

Sri Lankan Ambassador to China Palitha Kohona – Photo: REUTERS

“With the current situation, there are very few countries willing to do something. China is one of the countries that can do something very quickly,” Bloomberg news agency quoted Ambassador Kohona as saying. revealed on 12-4.

According to Mr. Kohona, China has sent reassuring signals to Sri Lanka, announcing that loans and credit packages to buy goods for Colombo are being promoted.

Sri Lanka hopes to receive $1 billion from Beijing to repay previous loans from China that are due in July. Accompanying this loan is a $1.5 billion credit package granted by Beijing so that Colombo can buy materials for the manufacturing industry, such as textiles.

Ambassador Kohona declined to disclose the new loan terms or when it will be disbursed. However, he hopes the money will reach Sri Lanka soon, possibly in the next few weeks.

This is not the first time that Colombo has asked countries to grant credit packages for the country to buy imported goods. Before China, Sri Lanka also asked India for a $1.5 billion credit package.

It is essentially the same as taking out a loan, but the borrower usually has to use the goods and services provided by the lender. These goods and services will be converted to cash in the amount commensurate with the level of credit granted.

Earlier, on the same day on April 12, the Central Bank of Sri Lanka announced that it would stop paying foreign debts because it ran out of foreign currency. This announcement was seen by Western media as an indirect statement that Colombo was “insolvent”.

Talking about China’s help, Ambassador Kohona revealed that Sri Lankan President Gotabaya Rajapaksa personally wrote to Chinese President Xi Jinping asking for credit packages.

Due to the lack of foreign currency, the Colombo government also hopes that Beijing will help the country have money to buy fuel or at least provide fuel for Sri Lanka to overcome the socio-economic crisis.

“Given the warm and close relationship between the two countries and the current difficult situation in Sri Lanka, I believe China will respond positively to our request for help,” Ambassador Kohona said. mandarin.

When asked about support for Colombo, Chinese Foreign Ministry spokesman Zhao Lijian avoided talking about specific actions.

“China has long supported Sri Lanka’s socio-economic development and will continue to do so in the future,” Zhao briefly answered Bloomberg’s question during a press conference on April 12.

According to some estimates by Western media, Sri Lanka owes foreign countries about 51 billion USD. The Colombo government insists that Beijing is not the one to push the country to the brink of default and that Chinese loans only account for 10% of Sri Lanka’s debt.