Sri Lanka’s Finance Secretary, Mahinda Siriwardena, expressed optimism that the country’s debt treatment chapter may soon be closed, setting the stage for a stronger financial future.
This progress is crucial as Sri Lanka aims to stabilize its economy and attract new financing. Speaking at an event on Wednesday (Oct. 30), Siriwardena highlighted China’s significant role in supporting Sri Lanka through recent economic challenges. “China has extended financial aid and loans to help Sri Lanka, especially in times of crisis,” he said.
He emphasized that China’s continued support is essential for Sri Lanka’s goals of economic growth and modernization. China’s involvement has been particularly instrumental in the debt treatment process, which began during the severe economic crisis starting in mid-2021.
In October 2023, China became the first official creditor to reach an agreement in principle on key financial terms for debt owed to the Export-Import Bank of China. This was followed by a finalized debt treatment agreement in June 2024, alongside a memorandum of understanding with the Official Credit Committee (OCC), representing 17 lenders co-chaired by France, India, and Japan.
After implementing the agreement, the Exim Bank of China became the first external lender to complete the debt treatment process, while the China Development Bank (CDB) is close to finalizing comparable terms.
Siriwardena acknowledged the technical challenges in aligning the debt treatment process with the IMF’s Debt Sustainability Analysis and ensuring comparability among creditors. He attributed the progress to mutual trust and good faith.
As Sri Lanka nears the conclusion of this vital phase, Siriwardena remains hopeful about resuming a robust financial relationship that includes fresh financing for high-priority projects.
