Sri Lanka's economy collapsed, and the government raised electricity prices. People took to the streets to protest.

(European News Agency)

[Financial Channel/Comprehensive Report] Sri Lanka’s debt default is about to expire for one year, and it is hard to wait for IMF financial assistance. The reason is that the debt negotiation has not yet been negotiated. International organizations are afraid that after giving the money, Sri Lanka will use it to repay China’s debt.

As to why China, the largest creditor, would not save it, a former Sri Lankan diplomat said bluntly that China has lent money to many countries. If China easily made concessions to Sri Lanka, other poor countries would knock on China’s door and demand similar arrangements.

Nikkei Asia reported that in February this year, due to various factors such as the increase in remittances from overseas migrant workers, Sri Lanka’s foreign exchange reserves increased to 2.2 billion US dollars, which is still far from enough. The IMF urgently needs to release 2.9 billion US dollars in financial aid as soon as possible, so as to enable the country to recover. Additional funding from the World Bank, Asian Development Bank and bilateral partners.

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In addition to seeking assistance from international organizations, the attitudes of China and India, two strategic competitors, towards Sri Lanka have recently become the focus of attention from the outside world.

India is quite active. Last week, Sri Lanka hoped that India would extend the US$1 billion credit line for half a year. India did not refuse, and the two sides are discussing this matter.

Last year, India also provided support worth about US$4 billion to Colombo. In mid-January this year, India also took the initiative to guarantee to the IMF to support Sri Lanka's debt restructuring.

Compared with China, which caused misfortune to Sri Lanka, it is considered unwilling to make similar commitments to India, and only provides assistance in the form of other than economic aid, which annoys US Treasury Secretary Yellen.

In February, Yellen blasted Beijing's approach to troubled countries, citing China's lack of full engagement and timely action as obstacles.

Former Sri Lankan diplomat Cook (George IH Cooke) interpreted that India and China have different priorities, and the continued collapse of Sri Lanka is an urgent problem for India, which may lead to an influx of refugees.

As for Beijing's attitude, Cook said that China provides loans to many countries and that easy concessions may cause other countries to knock on the door and "give us the same thing as Sri Lanka and help us".

The Sri Lankan ambassador to China, Palitha Kohona, said frankly that it is very time-consuming to obtain approval from China on the debt issue, and we have no doubt that China will take its time.

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