Sri Lanka begins talks with China on refinancing debt

Sri Lanka begins talks with China on refinancing debt

COLOMBO: Sri Lanka has begun discussions with China about refinancing its debt, a cabinet spokesman said on Tuesday, as Colombo struggles with its worst financial crisis in decades.
China has suggested to Colombo that it would prefer to refinance the debt, said Nalaka Godahewa, Sri Lanka’s media minister.
“Now since the IMF is willing 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,” Gohahewa said, adding discussions with Beijing were at an early stage.
Sri Lankan finance minister Ali Sabry was in Washington last week to talk to the IMF, the World Bank, India and others about financing help for the island nation, which has suspended payments on portions of its $51 billion in external debt.
Sri Lanka’s economy was hit hard by the pandemic and tax cuts by the populist government, leading to dwindling foreign currency reserves and shortages of fuel, food and medicines that have brought thousands onto the streets in sporadically violent protests.
China’s $3.5 billion of loans to Sri Lanka make it the joint-largest bilateral creditor.
President Gotabaya Rajapaksa asked China to help restructure debt repayments when he met Chinese foreign minister Wang Yi in January.
China’s foreign ministry and its embassy in Colombo could not immediately be reached for comment.
China’s goal of carbon neutrality by 2060 appears to be on track, but using more coal “could jeopardize this, or at least slow it down and make it more costly,” Clare Perry of the Environmental Investigations Agency said in an email.
Promoting coal will make emissions “much higher than they need to be” by the 2030 peak year, said Perry. “This move runs entirely counter to the science,” she said.
Beijing has spent tens of billions of dollars on building solar and wind farms to reduce reliance on imported oil and gas and clean up its smog-choked cities. China accounted for about half of global investment in wind and solar in 2020.
Still, coal is expected to supply 60% of its power in the near future. Beijing is cutting millions of jobs to shrink its bloated, state-owned coal mining industry, but output and consumption still are rising.
Authorities say they are shrinking carbon emissions per unit of economic output. The government reported a reduction of 3.8% last year, better than 2020′s 1% but down from a 5.1% cut in 2017.
Last year’s total energy use increased 5.2% over 2020 after a revival of global demand for Chinese exports propelled a manufacturing boom, according to the National Bureau of Statistics.

 

 

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