Paris Club Piles Pressure On China To Join Sri Lanka Debt Relie
BloombergFeb 08, 2023
Sri Lanka's Pres. Ranil Wickremesinghe told parliament on Wednesday that he expects the country's economy to grow again by the end of the year and that the government aims to exit bankruptcy by 2026.
His speech came after hundreds of public workers stepped out of government buildings to protest the introduction of a new income tax in January, ranging from 12.5% to over 36%, as the country attempts to boost government revenue from 8.3% of GDP to 11.3% in 2023 in order to access International Monetary Fund (IMF) resources.
Despite Western creditors to Sri Lanka being fully committed to the debt restructuring process, the international effort to rescue the island nation could be delayed or complicated as China, whose lending accounted for about one-fifth of Sri Lanka's public debt last year, remains unilateral in its decision not to join them. Beijing's attitude will ensure the island nation remains trapped in unsustainable amounts of debt.
China's share in Sri Lanka's external public debt is less than 10%, and Beijing has provided an extension on the debt service due in 2022 and 2023. Nevertheless, the West continues to use China as an excuse to evade its primary responsibility in reducing the debt burden for the developing world, trying to force Beijing to accept Western rules, political demands, and conditions on debt relief.