China confirms offer to Sri Lanka of debt moratorium
China has confirmed it is offering Sri Lanka a two-year moratorium on loan repayments as the Indian Ocean island nation struggles to restructure $51 billion in foreign debt that pushed it into a financial crisis
BEIJING (AP) — China’s government on Friday confirmed it is offering Sri Lanka a two-year moratorium on loan repayments as the Indian Ocean island nation struggles to restructure $51 billion in foreign debt that pushed it into a financial crisis.
China lent to Sri Lanka as part of Beijing's multibillion-dollar Belt and Road Initiative to increase trade by building ports and other infrastructure across Asia and Africa. The International Monetary Fund offered a $2.9 billion emergency loan but wants other creditors to cut debts, which Beijing had resisted, possibly for fear other borrowers would want the same relief.
China presented a plan to “provide an extension on debt service due in 2022 and 2023,” said a foreign ministry spokeswoman, Mao Ning. “During that period, Sri Lanka would not have to pay the principal and interest due on bank loans.”
China is Sri Lanka's third-biggest creditor after Japan and the Asian Development Bank, accounting for about 10% of its debt. But its lack of agreement blocked a final settlement.
