{"id":79623,"date":"2022-09-21T00:36:31","date_gmt":"2022-09-21T04:36:31","guid":{"rendered":"http:\/\/dbsjeyaraj.com\/dbsj\/?p=79623"},"modified":"2022-09-21T19:45:59","modified_gmt":"2022-09-21T23:45:59","slug":"sri-lanka-haspressing-china-for-a-4-billion-loan-but-talks-dragging-on-for-several-months-appear-to-have-not-yielded-an-agreement-rather-than-restructure-sri-lankas-existing-debt-beijing","status":"publish","type":"post","link":"https:\/\/dbsjeyaraj.com\/dbsj\/?p=79623","title":{"rendered":"Sri Lanka keeps pressing China for a $4 billion loan but talks dragging on for several months appear to have not yielded an agreement. Rather than restructure Sri Lanka\u2019s existing debt, Beijing has indicated it would prefer to instead extend new loans to an already heavily indebted economy."},"content":{"rendered":"

By<\/p>\n

Ananth Krishnan and Meera Srinivasan<\/strong><\/p>\n

China has offered Pakistan\u2019s visiting Army Chief technical help as the country deals with record floods, but did not announce any substantial financial assistance which its \u201call-weather\u201d ally has been seeking.<\/p>\n

Both Pakistan and Sri Lanka, facing financial stress, have been engaged in long-running talks with Beijing for assistance, but with negotiations in both cases having made little headway, both countries have turned to the International Monetary Fund (IMF). Their new IMF commitments are now likely to impact their owed payments to China, which has lent the two countries more than $26 billion in the past five years.<\/p>\n

Following talks in Xi\u2019an between Pakistan\u2019s Chief of Army Staff General Qamar Javed Bajwa and China\u2019s Defence Minister General Wei Fenghe, the Chinese side expressed willingness to provide technical assistance for flood relief work, Pakistan\u2019s official Inter Services Public Relations said.<\/p>\n

<\/p>\n

Chinese State media quoted Gen. Wei as calling on both countries \u201cto tide over difficulties together, fully trust each other, and unswervingly support each other\u2019s core interests on the way forward\u201d but did not detail any offers of assistance. Chinese media noted that Beijing had previously provided relief supplies worth $57 million.<\/p>\n

Earlier this month, Pakistan\u2019s government assured the IMF it would reduce capacity payments owed to Chinese projects or seek to restructure loans, with over $1.09 billion still owed to Chinese power producers.<\/p>\n

Meanwhile, Sri Lanka has been pressing Beijing for a $4 billion loan, but talks that have dragged on for several months appear to have not yielded an agreement. Rather than restructure Sri Lanka\u2019s existing debt, Beijing has indicated it would prefer to instead extend new loans to an already heavily indebted economy.<\/p>\n

On September 1, Sri Lanka and the IMF reached a staff level agreement with the Fund set to support Sri Lanka with an Extended Fund Facility (EFF) of $2.9 billion, contingent upon Sri Lanka\u2019s successful debt restructuring efforts, which will hinge in part on China\u2019s agreeability. Sri Lanka\u2019s creditors also include International Sovereign Bond (ISB) holders, multilateral lending agencies and other bilateral partners such as Japan and India.<\/p>\n

While Japan and India have been very supportive of the IMF process from the beginning, all eyes were on China to see if it would play ball, although some analysts in Sri Lanka expressed hope citing China\u2019s willingness to work on a debt relief deal in Zambia. <\/p>\n

In response to Sri Lanka\u2019s IMF agreement, Beijing said as a \u201ctraditional friendly neighbour\u201d of Sri Lanka and a \u201cmajor shareholder\u201d of the IMF, China has \u201calways been encouraging\u201d the IMF and other international financial institutions \u201cto continue to play a positive role in supporting Sri Lanka\u2019s response to current difficulties, efforts to ease debt burden and realise sustainable development.\u201d Sri Lanka is currently in talks with its creditors, with the hope of qualifying for the Fund\u2019s EFF.<\/p>\n

Courtesy:The Hindu<\/em><\/p>\n

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By Ananth Krishnan and Meera Srinivasan China has offered Pakistan\u2019s visiting Army Chief technical help as the country deals with record floods, but did not announce any substantial financial assistance which its \u201call-weather\u201d ally has been seeking. Both Pakistan and Sri Lanka, facing financial stress, have been engaged in long-running talks with Beijing for assistance, …<\/p>\n

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