Sri Lanka, the poster child for Beijing’s “debt-trap diplomacy” is asking for easier repayment terms amid a worsening financial crisis. Defaulting on U.S. dollar bonds may be a better option to help kick a credit addiction, says ugalani
Sri Lanka's President Gotabaya Rajapaksa asked China to help restructure debt repayments as part of efforts to help the South Asian country weather a worsening financial crisis, his office said in a statement on Jan. 9.
"The president pointed out that it would be a great relief to the country if attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the Covid-19 pandemic," Rajapaksa's office said. He made the request during a meeting with Chinese Foreign Minister Wang Yi in Colombo.
Rajapaksa also requested China to provide"concessional terms" for its exports to Sri Lanka, which amounted to about $3.5 billion in 2020, the statement said, without elaborating, as well as allowing Chinese tourists to return to Sri Lanka. Sri Lanka owes $4.5 billion in debt repayments this year starting with a $500 million U.S. dollar bond maturing on Jan. 18. A $1.5 billion currency swap from China helped the island boost its reserves to $3.1 billion at the end of December.Chinese Foreign Minister Wang Yi poses for a photograph with Sri Lanka's Prime Minister Mahinda Rajapaksa during their bilateral meeting in Colombo, Sri Lanka, January 9,2022.