Ali Sabry: ‘We are very hopeful of China’s cooperation’

COLOMBO: China “will not join” the official creditors’ platform negotiating a common debt treatment plan with Sri Lanka, but Colombo is “very confident” of Beijing’s bilateral support to the island’s economic recovery, Foreign Minister Ali Sabry said.

“We are very hopeful of China’s cooperation. I was recently in China and met with the Foreign Minister, Finance Minister, and Chairman of the Exim Bank [Export-Import Bank of China]. They have said they will not come on board the common platform…but will support us bilaterally. We are very confident,” he told a media conference in Colombo.

In May this year, 17 countries that have extended loans to Sri Lanka formed an “official creditor committee”, co-chaired by India, Japan, and France, to discuss Sri Lanka’s request for debt treatment, after last year’s debilitating financial crisis pushed the country to a sovereign default.

China has attended the committee’s meetings as an observer, but its decision to stay out of the official creditors’ committee complicates the exercise for Sri Lanka, especially with other creditors repeatedly underscoring creditor equitability.

While private creditors holding International Sovereign Bonds (ISBs) have the largest share of Sri Lanka’s foreign debt, China is the island’s biggest bilateral lender, followed by Japan, and India.

ssuing a statement following the first meeting of the creditors’ committee, the Paris Club — an informal group of official, mostly western, creditor nations — highlighted President Ranil Wickremesinghe’s assurance of transparency and comparability of treatment for all external creditors, and that “no side arrangements inconsistent with comparability of treatment” will be made with any creditor.

Reiterating Mr. Wickremesinghe’s promise, Minister Sabry said on Monday: “All bilateral debt treatment will be comparable. That means no one will get anything better than the other. So, it is understood that ultimately, everybody must agree to the same kind of treatment.” He implied that regardless of whether China joins the creditors’ committee, or negotiates its debt treatment bilaterally with Sri Lanka, the terms will be the same.