Sri Lanka Begins Talks With China on Refinancing Debt

Sri Lanka’s government said on Tuesday that it is discussing obtaining another loan from Beijing to repay some of its debts to Chinese banks as the island nation struggles with its worst financial crisis in decades.

Nalaka Godahewa, Sri Lanka’s media minister said China expressed that it was not in favor of restructuring debts, although it would prefer to refinance them. 

“Now since the IMF is willing to engage with Sri Lanka, the other countries are aware we have support. Already we have been promised support from the World Bank and other agencies,” Godahewa said.

Sri Lanka has about $7 billion in external debt due to be repaid this year, with an upcoming $25 billion due over the next five years. It has $3.5 billion worth of loans from China.

Sri Lanka is struggling to repay its debts as it is experiencing a severe shortage in foreign exchange reserves, making it unable to pay for imports of essential goods such as food and fuel.

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