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Unclear data on Chinese debts poses challenges for Sri Lanka’s negotiations with IMF

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Unclear data on Chinese debts poses challenges for Sri Lanka’s negotiations with IMF

Unclear data on Chinese debts may become a hurdle in Sri Lanka’s negotiations with the global lender IMF for a bail out, says Beijing Bulleting quoting various reports.

China is known as opaque creditor as the experience of IMF vis-à-vis Pakistan and several African countries shows. 

Official data from Sri Lankan Finance Ministry puts China debt burden at only about 10 per cent of the country’s total external debt of USD 35.1 billion at the end of April last year but, according to some estimates, it could be 20 per cent if the Chinese loans to government and state -owned enterprises is factored in.  

Yet, China has offered a relatively small amount of humanitarian aid to Sri Lanka, and has not responded to Colombo’s requests for urgent credit support of USD 2.5 billion.

China’s reluctance to offer debt relief to Sri Lanka is attributed to its fear of facing similar demands from countries in its debt trap.  “They (Chinese) seem to not want to set a precedent in Sri Lanka of offering debt relief that other countries can then also request”, Alan Keenan, senior consultant on Sri Lanka at the International Crisis Group (ICG) told Nikkie Asia.

The Rajapaksas who ruled Sri Lanka till popular upsurge brought curtains down on their regime, had expected a helping hand from China. In fact, the Sri Lankan envoy in Beijing pump primed this belief.

But the hope remained a mirage even as the economic crisis impacted food security, agriculture, livelihoods, and access to health services. And the Colombo Consumer Price Index surged 55 per cent.

With public unrest still simmering, Ranil, Wickremesinghe government faces a race against time to negotiate a deal with the IMF.