By Mandana Ismail Abeywickrema
Sri Lanka approaching the International Monetary Fund (IMF) has had an impact on the ongoing discussion for a $ 2.5 billion assistance sought by the Government of Sri Lanka, as well as future loans, Chinese Ambassador to Sri Lanka Qi Zhenhong said yesterday (25).
“The Sri Lankan Government going to the IMF has had an impact on the discussions,” the Chinese envoy said, speaking to a group of selected senior journalists, adding that debt restructuring, which is an important fact in IMF negotiations, would have an impact on future loans.
He added that both the Governments of China and Sri Lanka were still engaged in discussions on the financial assistance package that includes a $ 1 billion loan facility and a $ 1.5 billion line of credit.
However, Zhenhong noted that China will closely watch the discussions between the Government of Sri Lanka and the IMF, and that countries that had sought IMF bailouts had faced strict conditions.
However, Zhenhong added that China has already provided assistance to Sri Lanka to the tune of $ 2.8 billion in different forms. The $ 2.8 billion assistance comprises a $ 1 billion term facility, Chinese Yuan (CNY) 2 billion ($ 300 million) in assistance, and a $ 1.5 billion swap.
Zenhong also claimed that the Government of Sri Lanka is yet to settle payments amounting to $ 390 million for 12 fuel shipments that were delivered to the country between July 2021 and January 2022.
He explained that China had supplied 19 shipments supplying a total of 730,000 metric tonnes (MT) of fuel to the Ceylon Petroleum Corporation (CPC) “at the most economical prices” from last July till this January.
However, according to him Sri Lanka had made payments for only seven of the total 19 shipments and the letters of credit (LCs) for the shipments had been opened by People’s Bank and Bank of Ceylon.
The Ambassador added that China had remained silent about these dues without publicising the matter until now, since the Chinese believed in maintaining a low profile in its assistance.