China has pledged to help Sri Lanka with its debt crisis, but it has not yet agreed to a specific debt treatment plan. This is a major sticking point in the negotiations, as other creditors are wary of China’s refusal to join the common platform.
Chinese Foreign Minister Wang Yi on Wednesday vowed, “China will help Sri Lanka effectively address the challenges of financial debt”, according to a statement from the office of Prime Minister Dinesh Gunawardena, who was the chief guest at the ongoing China-South Asia Exhibition in Kunming, in China’s southern Yunnan Province.
The IMF is also watching the situation closely, as the second tranche of its $3 billion bailout package is contingent on Sri Lanka’s progress on debt treatment. The IMF has emphasized the need for comparable terms and transparency, and it is unclear whether China will be willing to meet these requirements.
The next few weeks will be critical for Sri Lanka, as it tries to reach an agreement with its creditors. The IMF’s assessment in September will be a major milestone, and it is possible that the bailout package could be delayed if there is no progress on debt treatment.
It is also worth noting that China’s pledge of help comes at a time when the two countries are engaged in a trade war. This could make it more difficult for China to provide the kind of financial assistance that Sri Lanka needs.
At the crossroads Overall, the situation is fluid and uncertain.
It is possible that China will eventually agree to a debt treatment plan that is acceptable to other creditors, but it is also possible that the negotiations will fail. Only time will tell how this situation will play out.
Comenteter Aylan Kadirgamar said” China is trying to get away from the loan shark stigma by dishing out rhetorical statements”
In recent years, China has been criticized for its lending practices in developing countries, which have been accused of being predatory and opaque. This has led to a backlash against Chinese lending, and China has been forced to make some changes to its approach.