This handout photograph released by Sri Lanka Prime Minister’s Office on March 27, 2024 shows Sri Lanka’s Prime Minister Dinesh Gunawardena (left) shaking hands with China’s President Xi Jinping before a meeting in Beijing.
| Photo Credit: AFP

Chinese President Xi Jinping has assured continuous support to Prime Minister Dinesh Gunawardena for Sri Lanka’s efforts for “political and socio-economic progress” and also said Beijing will stand for safeguarding the island nation’s territorial integrity and sovereignty.

China and Sri Lanka agreed to continue to act under the friendship, peace, mutual respect and fivefold principle in international affairs that do not interfere in the internal affairs of a country during a meeting between Mr. Xi and Mr. Gunawardena on March 27 at Great Hall in Beijing, the Prime Minister’s office said in a statement in Colombo on March 28.

“Chinese President assured continuous support of China to Sri Lanka’s efforts for political and socioeconomic progress. The Chinese President said that China will always stand for safeguarding independence, territorial integrity and sovereignty of Sri Lanka,” the statement said.

“It was emphasised that bilateral relations should be based on mutual respect and mutual productivity between the countries, and acting according to that policy would set a good example for both countries,” it added.

President Xi assured that China will support the schemes necessary for the development of Sri Lanka as soon as they are presented.

China is willing to work with Sri Lanka to carry forward the spirit of the Rubber-Rice Pact, which is characterised by “independence, self-reliance, unity and mutual support,” to consolidate political mutual trust, enhance exchanges of experience in governance, expand practical cooperation, and advance the high-quality Belt and Road cooperation, Mr. Xi was quoted as saying in an official press release in Beijing.

Earlier on March 26, China and Sri Lanka signed nine new agreements as Prime Minister Mr. Gunawardena met his counterpart Chinese Premier Li Qing amid Colombo’s efforts to restructure its bankrupt economy but no details about the agreement were made available.

China is Sri Lanka’s largest bilateral lender owning 52% of the $40 billion external debt when Sri Lanka announced its sovereign default in 2022.

The Chinese assurance comes days after the International Monetary Fund (IMF), which concluded its second review of the $2.9 billion bailout with Sri Lanka, said reaching an agreement with the country’s commercial creditors, the international bondholders and China Development Bank was the key to achieving debt sustainability.

During the high-level bilateral talks, the Chinese Premier praised Sri Lanka’s economic progress after a period of economic downside and said his country would also extend assistance to develop Katunayake International Airport, Hambantota Port and Colombo Port City, news portal NewsFirst.lk said.

Colombo:

The Sri Lankan government has confirmed that it has concluded a preliminary deal with China on the restructuring of its debts to Beijing, seen as a “big step” in the cash-strapped country’s economic recovery.

In a statement issued on Wednesday, the Ministry of Finance said, “The Government of the Democratic Socialist Republic of Sri Lanka is pleased to announce that it has reached an agreement on the key principles and indicative terms of a debt treatment with the Export-Import Bank of China.”

China holds about 52 per cent of Sri Lanka’s USD 46 billion external credit.

“The agreement in principle covers approximately USD 4.2 billion of outstanding debt,” it said, adding that it constitutes “a key step towards restoring Sri Lanka’s long-term debt sustainability and will pave the way to a prompt economic recovery”.

The terms of the restructuring agreed upon will provide the space for Sri Lanka to implement its reform agenda.

The government has expressed hope that it should also facilitate approval by the International Monetary Fund (IMF) of the second tranche of the USD 2.9 billion bailout of approximately USD 334 million.

“Yesterday marked a big step for Sri Lanka as we reached this landmark agreement in principle on debt treatment terms with our largest single creditor. We thank China Exim Bank for its support in resolving our country’s debt situation.

Sri Lanka was hit by its worst economic crisis in history when its foreign exchange reserves fell to a critical low and the public came out on the streets to protest the shortage of fuel, fertilisers and essential commodities.

This agreement constitutes a key milestone in Sri Lanka’s ongoing efforts to foster its economic recovery, the Secretary to the Treasury Mahinda Siriwardena said.

On Wednesday, State Minister of Finance Ranjith Siyambalapitiya said China’s assurance to Sri Lanka to restructure its external debt is an important development for the debt-ridden country’s economic situation.

He added that when Sri Lanka went into default in 2022 due to the economic crisis, the island’s outstanding external debt stood at around USD 46 billion.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)