These days, the media show of Ranil’s government is that China agreed to support Sri Lanka’s debt restructuring. After his visit to China, Foreign Minister Ali Sabry tells to the Sri Lankan and international media that China has agreed to debt restructuring. Daily Mirror, the newspaper of Ranil’s uncle, had reported that China had agreed to support the restructuring of the debt, and that this weekend the Secretary of the Ministry of Finance would go to China to make a breakthrough. An English newspaper also mentioned this last weekend.
This media spectacle shows that the government is making a big effort to show the international community that China has agreed to debt restructuring. That is because India, Japan and the Paris Club announced that they are watching closely about the debt restructuring agreement between China and the Sri Lankan government. Ranil’s government’s message to India, Japan and the Paris Club is that China agrees; now you proceed.
Before obtaining IMF facility, Ranil’s government persuaded India, Japan, and the Paris Club to agree debt restructure and provided that guarantees to the IMF. China refused to guarantee debt restructuring at the time.
But China finally gave that guarantee. The reason behind China’s assurance was a mystery to India, Japan and the Paris Club. After receiving IMF facility, in order to get the debt restructure in place, India, Japan and the Paris Club said to Sri Lankan Government to reach for an agreement with China to get to know the China’s position on this. Although Sri Lanka’s Foreign Minister Ali Sabry said China’s agreement is OK, Chinese Foreign Ministry spokesperson Mao Ning has expressed such an opinion in a press conference.
Below is the question the journalist asked the Chinese spokeswoman and the answer given by the press
Reuters: The governor of the central bank of Sri Lanka has asked foreign debt holders to accept a 30-percent cut on any loans they have extended as it seeks to restructure its debts. As Sri Lanka’s largest bilateral creditor, is China willing to accept this proposal?
Mao Ning: We have repeatedly made China’s position clear on Sri Lanka’s debt issue. We support Chinese financial institutions in actively working out the debt treatment with Sri Lanka. We are ready to work with relevant countries and international financial institutions to jointly play a positive role in helping Sri Lanka navigate the situation, ease its debt burden and achieve sustainable development. At the same time, we call on commercial and multilateral creditors to take part in Sri Lanka’s debt restructuring based on fair burden-sharing.
This answer shows that there has been no change in China’s previous position regarding China’s debt. China said from the beginning that Multilateral Creditors should also reduce Sri Lanka’s debt burden. Ranil’s government knows that this Chinese position has not changed. Foreign Ministry sources say that the discussions between the Government of Sri Lanka and the Exim Bank have not been successful. If it is so, Ali Sabry and the government is showing this media show first to make a deal with India, Japan and the Paris Club before make a deal with China. Ranil will go to India first. He expects a breakthrough in debt restructuring in India. It is clear that Ali Sabry is playing the Chinese card to induce India for that. The question is whether the international community, including India, Japan, who are tired of the Rajapaksa’s playing the Chinese card, will fall into the Chinese card trap of Ranil’s government