Debt-stricken Sri Lanka asks China to fix $ 1.5 billion swap deal

Sri Lanka has called for amendments to the terms of the 1.5 billion yuan-denominated swap facility so that China can use it to fund important imports, Prime Minister Ranilwikramashinha said Tuesday. ..

A swap agreement signed by the Central Bank of Sri Lanka in March 2021 provides that funds can only be used if Sri Lanka has sufficient foreign exchange reserves to last for three months.

“For three months after receiving the loan, we have no foreign exchange reserves. Our former officials received the loan to deceive the country,” Wickremesinghe said in a speech. Parliament.

“In such a situation, we will not be debt-free. We asked the Chinese government to consider removing the terms from the agreement signed with them,” he added.

Sri Lanka is on the verge of bankruptcy, with foreign exchange reserves plummeting 70% over the past two years and struggling to pay for important imports.

Wickremesinghe said the country would need at least $ 6 billion to float for the next six months. On June 9, the United Nations arranged a global public appeal to provide $ 48 million in aid over a four-month period.

The government has also sought help from India and Japan. Wickremesinghe said the suspension of certain projects that Sri Lanka did not notify Japan had disrupted relations between Sri Lanka and Japan.

He requested the Parliamentary Commission on Finance to investigate the suspension of projects granted by Japan and India, claiming that the project was suspended or suspended for no reason.

Wickremesinghe also called on the International Monetary Fund (IMF) to hold a meeting to support the unity of lending partners. Sri Lanka is currently in talks with the IMF on a $ 3 billion loan package, Reuters reported.

“Holding such conferences under the leadership of India, China and Japan will be of great help to our country. China and Japan have different credit approaches. Through such conferences. We hope to reach a consensus on the financing approach. “

China owes about 10 percent of Sri Lanka’s $ 51 billion external debt. Sri Lanka has called on China to restructure its debt and provide $ 2.5 billion in financial support. In May, the Sri Lankan government goes to Beijing Expansion A total aid package of 500 million yuan ($ 76 million).

Sri Lanka is also an important part of China’s Belt and Road Initiative, which other countries have criticized as a “debt trap” for small countries. Some of its infrastructure projects, funded by foreign investment, have put the country in debt and failed to generate income.

In December 2017, the Sri Lankan government leased Hambantota’s main port to China for 99 years, converting $ 1.4 billion of unpaid loans into equity. This brought together thousands of people in protest of the deal.

Aldograph Redley


Aldgra Fredly is a Malaysia-based freelance writer featuring the Epoch Times Asia Pacific News.

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