image source, Getty Images
Against the background that the International Monetary Fund is ready to provide 2.9 billion US dollars to Sri Lanka, which is suffering economically, although China has offered to support it, the United States has said that China’s support is not enough.
This was mentioned by the Under Secretary for Political Affairs of the US State Department, Victoria Ngunland, who is on an official visit to Sri Lanka.
He said this while addressing a press conference held in Colombo yesterday.
He notes that if debt restructuring is to be undertaken, the confidence of the International Monetary Fund must be gained.
In this situation, he also hoped that the United States would do all kinds of assistance to get a loan from the International Monetary Fund.
He says that India has provided the credible assurances expected by the International Monetary Fund.
However, he stressed that the assurance given by China so far is not enough and a credible assurance should be given from China.
Undersecretary for Political Affairs of the US State Department, Victoria Newland, said that she expects China to provide a certificate that will win the confidence of the International Monetary Fund.
image source, Ambassador Julie Chung Twitter
Warranty Certificate issued by China
Export-Import Bank of China has given Sri Lanka a two-year grace period to repay the loan.
In addition, the Export-Import Bank of China announced in a letter at the end of last month that it would support Sri Lanka in obtaining 2.9 billion US dollars from the International Monetary Fund.
If loans are to be granted to Sri Lanka from the International Monetary Fund, the compliance of the lending countries is seen as essential.
In this situation, among the countries that have given massive loans to Sri Lanka, India and China are leading.
The Sri Lankan government has in the past made massive efforts to secure the agreement of these two countries for debt restructuring.
In response, India agreed to debt restructuring.
Indian External Affairs Minister S. Jaishankar paid an official visit to Sri Lanka on the 19th.
During this, he met various parties including President Ranil Wickramasinghe, Prime Minister Dinesh Gunawardena, Foreign Minister Al Sabri and held talks.
Subsequently, the Indian Foreign Minister and the Sri Lankan Foreign Minister held a joint media conference in Colombo on the 20th.
image source, PMD SRI LANKA
Indian External Affairs Minister S. Jaishankar had said that he had handed over the compliance certificate for Sri Lanka’s debt restructuring to the International Monetary Fund.
“We did what we believed was right rather than waiting for others to do it,” said S. Jaishankar.
He mentioned that India has sent the certificate related to Sri Lanka’s debt restructuring to the International Monetary Fund without delay and expects other creditors to do the same.
After securing India’s agreement, the Sri Lankan government was expecting China’s agreement.
In this context, China has now agreed to Sri Lanka’s debt restructuring.
However, this compliance provided by China has been declared insufficient by the International Monetary Fund.
Why is China backing away from debt restructuring?
image source, RAJAGOPAL YASIHARAN
Yasiharan, Journalist
Journalist Yasiharan explained to BBC Tamil the reason behind China’s backtracking on Sri Lanka’s debt restructuring.
“There are two or three reasons for China’s backtracking on debt restructuring. In China’s lending policy, there is no program called debt restructuring. China would not do that to any country. That is the first reason.
Unless their loan plan is a loan with long-term goals, they will not go for debt restructuring. So far they have agreed to debt restructuring for only one country. Only one island country in Africa has gone into debt restructuring.
Therefore, Sri Lanka is demanding that they be included in the debt restructuring, citing it as a reason. 55% of Sri Lanka’s loan from Sarvaseth was from China. If China goes for debt restructuring in such an environment, it could be a setback for China.
China has provided loans to many island countries including Sri Lanka. China’s credit is focused on projects such as ports, airports, and commercial centers. When Sri Lanka goes for debt restructuring, taking this as an example, other countries in crisis will also demand debt restructuring. The important reason is that China cannot handle it,” says journalist Yasiharan.
While China has said it will not support debt restructuring, it has now supported Sri Lanka. What is the reason for that?
They have said that they will provide cooperation to Sri Lanka in crisis. Is China restructuring its debt? If not, do they suspend the loan? There is a move. If the loan is suspended for two years then there is no need to repay the loan for two years.
The loan is to be repaid after two years. Another thing is that this system is to suspend the loan for a short period of time. Debt restructuring involves extending the remaining debt owed to China, for example, by about 10 years and devising a new debt plan. The amount of lending in the scheme will decrease.
But, times last. This is the restoration. China’s current announcement is a two-year loan moratorium. That means after two years the loan will have to be repaid. China falls under this system. But India does not come under that system.
They have come under the scheme of Indian Reconstruction. The announcement was made by the Export-Import Bank of China,” he said.
Debt restructuring – Debt moratorium What are the advantages and disadvantages for Sri Lanka?
“Debt restructuring – Debt moratorium In both cases, Sri Lanka has to repay the debt. Pros cannot be seen as cons. Sri Lanka needs a temporary solution. Therefore, whichever of these two is given, it will be favorable for Sri Lanka at the moment. Because it is a country with a huge debt crisis, any opportunity is good for Sri Lanka,” says journalist Yasiharan.
China’s announcement comes after India first received support for a loan from the International Monetary Fund. Why did China wait for India’s announcement?
“The moves of India and China in the Sri Lankan issue are today not yesterday, it was seen that the two countries behaved in competition with each other in every period. Even debt restructuring is selfish.
Even India did not come forward to help Sri Lanka in common interest. China also did not come forward to help Sri Lanka in general welfare. Both these countries are world powers. Sri Lanka is a great asset to both these countries.
Even if Sri Lanka leans towards one country, it will have a massive impact on the other country. It will have a massive impact on global politics as well as domestic political causes. So, as if providing additional aid to Sri Lanka, there is a competition here as to who can keep the most debt in their own hands.
“These two countries are using Sri Lanka as dice,” noted journalist Yasiharan.
image source, Getty Images
Debt restructuring will be completed within three months
President Ranil Wickramasinghe has said that the debt restructuring process can be completed within the next two to three months.
He also says that the negotiations with China have reached the final stage.
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