Fighting financial crisis: Sri Lanka hopes for $2.5bn rescue loan from China

Sri Lankan Ambassador to China Palitha Kohona said that Chinese authorities had assured him that they were making arrangements for loans and credit lines for the island nation.

Sri Lanka is hoping to borrow $1 billion from Beijing in order to repay existing Chinese loans due in July, as well as a $1.5 billion credit line to purchase goods from it such as textiles needed to support the apparel export industry, he said.

Kohona said, “Given the current circumstances, there aren't that many countries that can step out to the pitch and do something and China is one of those countries that can do something very quickly.”

Sri Lanka is embroiled in its worst economic crisis since independence, as consumer prices rose by 19 per cent the fastest in Asia last month.

Soaring costs, widespread power outages, and shortages of food, fuel and medicine have led to violent street protests and left President Gotabaya Rajapaksa's government in a minority in the country's parliament.

Rajapaksa had recently written to Chinese President Xi Jinping directly seeking credit support, Kohana said, and Sri Lankan officials are hopeful that Beijing will address the issue as soon as possible.

Kohana further said that Sri Lanka had also sought Chinese help to buy fuel that it was struggling to secure because of the nation's foreign-currency shortage, but wasn't sure if China could provide such support, given that it itself is a net importer of such goods.

(With UNI inputs)