Palitha Kohona Confident China Will Provide Debt Relief

Sri Lankan Ambassador in Beijing Palitha Kohona said he’s very confident that China will come through on $2.5 billion in financial support as the island nation’s inflation-driven crisis becomes direr. Ambassador Kohona said that he’d received reassurances as recently as last week from authorities in China those arrangements for loans and credit lines were progressing. Sri Lanka is looking to borrow $1 billion from Beijing so that it can repay existing Chinese loans due in July, as well as a $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. Beijing has long enjoyed warm relations with Colombo but has yet to deliver a much needed lifeline to Sri Lanka. Rajapaksa had recently written to Chinese President Xi Jinping directly to seek credit support, Kohana said, and Sri Lanka officials are still encouraging Beijing to address the issue as soon as possible. “Our request will be honored, but they have to go through the Chinese system,” he said. “We are very confident that sooner than later, these two facilities will be made available to us.” Kohana said that Sri Lanka had also sought China’s help to buy items such as fuel that it was struggling to secure because of the nation’s foreign-currency shortage. He said he was unsure whether China could provide such support, given that it is a net importer of such goods. (Bloomberg)