Sri Lanka’s President Ranil Wickremesinghe said on Tuesday that China has agreed to restructure its loans to the bankrupt island nation, clearing the last obstacle to an International Monetary Fund bailout.
China’s state-owned Exim Bank “sent a letter to the IMF” on Monday night expressing Beijing’s willingness to “restructure” credit to Sri Lanka, Wickremesinghe told parliament.
The Lankan president added that he now expects the first tranche of the IMF package to be released within a month.
“No sooner the letter from the Exim Bank of China went to the IMF, I signed Sri Lanka’s Letter of Intent to go with the IMF programme,” he said.
Sri Lanka defaulted on its $46-billion foreign debt last April during its economic crisis, which caused months of food and fuel shortages in the South Asian nation.
Just over $14 billion of that is bilateral debt owed to foreign governments, of which China holds 52 per cent.
Wickremesinghe’s government has been working to secure a $2.9 billion rescue package from the IMF to restore Sri Lanka’s ruined public finances.
His administration has imposed sharp tax hikes, ended subsidies on petrol and electricity, and made plans to sell off loss-making state enterprises to satisfy the terms of the bailout.
(With inputs from agencies)
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