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China reaffirms its financial support to Sri Lanka

China reaffirms its financial support to Sri Lanka

China said on Friday that it would continue its financial support for Sri Lanka, before the conclusion of its Prime Minister's visit to Beijing on Saturday, which came to try to conclude an agreement to restructure Colombo's debts.

China is willing to “continue supporting its financial institutions, actively negotiate with Sri Lanka, maintain friendly contacts with other creditors, play a positive role in the International Monetary Fund, and provide financial assistance to Sri Lanka,” the Chinese Foreign Ministry said in a statement. Friday. Foreign Affairs in a joint statement.

Sri Lankan Prime Minister Dinesh Gunawardena, who arrived in China on Monday, met with Chinese President Xi Jinping.

The economic crisis in Sri Lanka was on the agenda, as China owns 10% of Colombo's external debt.

The two parties agreed to “make every effort to promote the Port City Colombo (a special economic zone in the Sri Lankan capital) and the Hambantota Development Project (another Sri Lankan city), and turn them into flagship projects for Sino-Sri Lankan cooperation. – Building the Belt and Road,” the statement said. Journalist, referring to the Chinese initiative for the New Silk Roads.

The southern port of Hambantota is part of the grand plans launched by former President Mahinda Rajapaksa, who is in power until 2015.

It has borrowed heavily from China to implement projects that many believe were the cause of the economic crisis that Sri Lanka is experiencing, the most serious crisis in its history.

Unable to repay the loan it took from China in 2017 to build the Hambantota port, Sri Lanka ended up handing it over for 99 years to China Merchants Group, a state-owned group of Chinese companies, for $1.12 billion.

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Sri Lanka defaulted on its $46 billion external debt in April 2022 after depleting its foreign currency reserves.

In 2023, the International Monetary Fund approved a $2.9 billion bailout over four years for Sri Lanka, which remains conditional on restructuring its debt.

In December, China agreed “in principle” to this restructuring, but neither party has specified the details and no agreement has yet been signed.

The Sri Lankan government announced that the restructuring of its external debt will end at the beginning of April.