Two of Sri Lanka’s largest bilateral creditors, China and India, are finally taking steps to engage Colombo after months of inaction in resolving the South Asian country’s worsening debt crisis.
The Chinese led the charge. Chen Zhou, vice minister of the international development of the Chinese Communist Party, embarked on a four-day visit Saturday. Then on Thursday, the day after Chen leaves, India’s External Affairs Minister S. Jaishankar arrives for two days of talks.
Sri Lankan officials say the focus of the discussions with both representatives will be getting “written financial assurances” that Beijing and New Delhi will restructure their loans to clear the way for a $2.9 billion rescue package from the IMF.
So far, those talks are off to a good start, at least with the Chinese side. Last week, President Ranil Wickremesinghe said his talks with China Exim Bank President Wu Fulin were “positive.”
WHY IS THIS IMPORTANT?: Sri Lanka is one of the flashpoints in a growing Global South debt crisis. China plays an outsized role as a holder of 20% of the country’s bilateral debt.
Observers are watching how China will restructure its debts in Sri Lanka for clues as to how Beijing will deal with other developing countries in debt distress. Many are also keen to see if geopolitical competition between India and China will complicate Sri Lanka’s restructuring process.
SUGGESTED READING:
- Daily Mirror: High-level delegation of the Communist Party of China to visit SL by Kelum Bandara
- The Hindu: Jaishankar to visit Sri Lanka, may discuss debt crisis by Suhasini Haidar and Meera Srinivasan
