Tag: Sri Lanka

China and multilateral financial institutions

Q: “has China shown the IMF, the deal that has supposedly been struck between the China EXIM Bank and Sri Lanka?”

A: “We have not seen the details of this yet, but this again should come out through our routine engagement.”

Transcript of the Press Briefing on the 2023 China Article IV Consultation Mission

That exchange, in the latest press briefing by the IMF on China, caused us to revisit our post on Sri Lanka’s debt situation and provides an opportunity to expand on the broader geopolitical issues at play.

China’s interactions with multilateral financial institutions embody its larger international ambitions. Through strategic policy choices and leveraging its creditor status, China is actively working to transform these institutions, seeking a balance between its duties and rights, and striving to infuse the global financial governance structure with its own brand of influence.

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Sri Lanka – debt update

An interesting wrinkle in Sri Lanka’s ongoing economic resurrection efforts, and one with broader geopolitical implications.

Sri Lanka had reached an agreement with the Export-Import Bank of China (China Exim Bank) on key terms and principles for restructuring its debt, which marks a significant step towards unlocking further financial aid from the International Monetary Fund (IMF). The agreement, made in October, encompasses approximately $4.2 billion of Sri Lanka’s outstanding debt.

The IMF is expected to analyze the details of this tentative agreement, which are crucial for Sri Lanka to progress with its IMF program. The Sri Lankan government is awaiting approval from the IMF for a second tranche of funds, and a debt restructuring proposal from the Paris Club consortium..

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