China must cooperate with Sri Lanka on debt restructure: Samantha Power

‘Political reform and economic recovery must go hand in hand in Sri Lanka’

China must cooperate with Sri Lanka in its debt restructure process, Samantha Power, Administrator of the United States Agency for International Development (USAID) said on Sunday, while assuring Colombo of the U.S.’s support.

Sri Lanka, which opted for a preemptive sovereign default in April amid a rapid downturn, must negotiate with its diverse creditors — International Sovereign Bond holders, multilateral agencies, bilateral creditors such as China, Japan, and India — and restructure its outstanding debt to them, in order to qualify for a $2.9 billion-package from the International Monetary Fund (IMF).

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Addressing a media conference at the end of her two-day visit, Ms. Power said: “The United States as a creditor, and as a member of the Paris Club, stands ready to participate in the restructuring of Sri Lanka’s debt. It is imperative that all of Sri Lanka’s creditors, most notably the People’s Republic of China cooperate in this process openly and on comparable terms with each other.”

The observation appeared in line with her remarks in New Delhi in July, that “opaque” Chinese loans financing “headline-grabbing” infrastructure projects in Sri Lanka had contributed to the island nation’s crisis. It also echoed India’s statement after Sri Lanka reached a staff-level agreement with the IMF that “creditor equitability and transparency are important”.  Creditors, she said, had the chance to make “a very positive difference and relieve Sri Lanka of some of its acute debt distress.” During Ms. Power’s visit the USAID pledged $ 60 million towards fertilizers for farmers and emergency humanitarian assistance. 

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