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Palitha Kohona on future aid from China

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Palitha Kohona on future aid from China. According to a top Envoy, Sri Lanka is sure Beijing will agree “at some point” in its ongoing negotiations with China for up to $4 billion in help.

According to Palitha Kohona, Sri Lanka’s Ambassador to China, Colombo is seeking a $1 billion loan from Beijing to pay off an equal amount of Chinese debt that is due this year. He made this statement in an interview with Bloomberg Television on Friday. It is also looking for the activation of a $1.5 billion swap and a $1.5 billion credit line to pay for Chinese imports, he continued.

India, a neighbor, has given the insolvent South Asian nation aid worth around $3.8 billion, and talks are ongoing to secure further funds. Due to acute shortages, which have driven inflation to 70%, forced President Gotabaya Rajapaksa to depart the country and resign, the money is needed to pay for fuel and food purchases.

The Federal Government of Sri Lanka owes international investors roughly $12.6 billion in outstanding bonds; all repayments are halted, and defaults have been noted. It owes both bilateral creditors and international lenders nearly the same sum.

Kohona estimated that 10% of Sri Lanka’s foreign debt is owing to China. The interest rates on Chinese loans are greater, but Japan is owing nearly an equal share, the Acting President Ranil Wickremesinghe had earlier told Bloomberg News. Wickremesinghe is asking the IMF to provide financial support.

India has urged the IMF to accord the same treatment to all of Sri Lanka’s creditors. China is worried about possible repayment delays if the agreed-upon $1.5 billion swap is brought up in IMF negotiations, according to Sri Lankan authorities. Kohona said this line won’t be discussed in IMF talks but would not indicate whether China would allow Sri Lanka to use the exchange.

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