China has suggested to Colombo that it would rather refinance the debt, Sri Lanka’s media minister Nalaka Godahewa said.
“Now that the IMF is ready to engage with Sri Lanka, the other countries know we have support. We have already been promised support from the World Bank and other agencies,” Gohahewa said, adding that talks with Beijing are in found to be an early stage.
Sri Lankan finance minister Ali Sabry was in Washington last week to talk with the IMF, World Bank, India and others about financing aid to the island, which is making payments for parts of its $51 billion in foreign debt. has suspended.
Sri Lanka’s economy has been hit hard by the pandemic and tax cuts by the populist government, leading to dwindling foreign exchange reserves and shortages of fuel, food and medicine that have sent thousands onto the streets in sporadically violent protests.
China’s $3.5 billion in loans to Sri Lanka makes it the joint largest bilateral creditor.
President Gotabaya Rajapaksa asked China to help with debt repayment restructuring when he met Chinese Foreign Minister Wang Yi in January.
The Chinese Ministry of Foreign Affairs and the embassy in Colombo were not immediately available for comment.