India engaged in ‘close, constructive’ discussions with Sri Lanka, on rescheduling its debt

India is holding “close and constructive” discussions with Sri Lanka, on Colombo’s pending requests for rescheduling its debt repayment and for foreign money swap services underneath bilateral and SAARC preparations, the Indian mission right here stated on Tuesday.

Indian High Commissioner Gopal Baglay held discussions “at senior levels” in Colombo on Monday and Tuesday, the assertion issued by the Indian High Commission stated, on taking ahead ongoing discussions.

The press launch comes two days after The Hindu reported that ‘With India yet to respond on debt freeze request, Sri Lanka turns to China’ for additional help. Sri Lankan Prime Minister Mahinda Rajapaksa had sought a moratorium on the debt owed by Colombo – totalling $960 million – throughout his New Delhi go to in February this 12 months. The request “was under consideration”, officers in the Ministry of External Affairs had informed The Hindu, including that they had been ready to listen to from Colombo on doable dates for the digital talks New Delhi had prompt.

“The matter [Sri Lanka’s requests] had been taken up at the leadership level and has been followed up by senior functionaries bilaterally,” the High Commission’s assertion stated on Tuesday, including that India “remains committed to partner Sri Lanka closely” for the latter’s sustained financial restoration and shared prosperity in the post-COVID world.

Mounting debt

Sri Lanka’s mounting exterior debt was a priority even earlier than the coronavirus pandemic, however its influence has aggravated the pressure on the island’s nation’s economic system that’s saddled with loans — bilateral, multilateral and in the worldwide cash market — amounting to billions of {dollars}.

This 12 months alone, Sri Lanka is scheduled to repay $ 2.9 billion of its debt, which Colombo is reportedly attempting to reschedule with bilateral companions. It is unclear how Sri Lanka will repay the apparently non-negotiable $ 1 billion worldwide sovereign bond maturing this October.

While economists and specialists have been arguing that Sri Lanka should keep away from resorting to additional debt in this example, Colombo seems to have few different choices in hand.

Sri Lanka is in talks with the IMF, from whom it sought a speedy financing instrument in April. Following the worldwide pandemic, Beijing has pledged a mortgage of $ 500 million to assist Colombo deal with its speedy influence. Sri Lanka already owes China about $ 5 billion. Further, upon Sri Lanka’s request the China Development Bank (CDB) on Tuesday entered right into a $140 million-facility settlement with the Bank of Ceylon, drawn underneath two tranches of $ 70 million every to assist the State-owned financial institution cope amid the pandemic.

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