Beijing, 30 March

China will play a "positive role" in easing the financial difficulties of cash-strapped Sri Lanka and its bid to achieve "debt sustainability" while Colombo will accelerate the formulation of a BRI cooperation plan to advance Beijing’s projects in the island nation, a joint statement said on Saturday.

As Sri Lankan Prime Minister Dinesh Gunawardena wrapped up his official weeklong visit to China, the joint statement brought out the highlights of the agreements discussed during his talks with Chinese President Xi Jinping and Premier Li Qiang besides attending the Boao Forum for Asia Annual Conference.

“The Chinese side expresses its readiness to continue supporting its financial institution in actively consulting with Sri Lanka, maintain friendly communication with other creditors, and play a positive role in the International Monetary Fund (IMF) to help Sri Lanka ease its financial difficulties and achieve debt sustainability,” the joint statement said.

During Gunawardena’s visit, both countries agreed to work together to deepen high-quality Belt and Road cooperation, accelerate the formulation of a Belt and Road cooperation plan, and make all-out efforts to advance the Colombo Port City project and the integrated development project of Hambantota Port as signature projects of Belt and Road cooperation between the two countries, the joint statement said.

Belt and Road Initiative (BRI) is China’s ambitious multi-country varied infrastructure project. According to the joint statement, Sri Lanka has agreed to accelerate the formulation of a BRI cooperation plan notwithstanding criticism of their financial viability.

China is Sri Lanka's largest bilateral lender owning 52 per cent of the USD 40 billion external debt when Sri Lanka announced its first sovereign default in 2022.

Seventeen countries that had extended loans to Sri Lanka formed a committee last year to discuss steps for debt restructuring negotiations but China preferred to take part only as an observer.

Sri Lanka said it would negotiate the settlement of its Chinese loans on comparable terms with that of other countries that have provided the loans.

The development comes days after the IMF, which concluded its second review of the USD 2.9 billion bailout with Sri Lanka earlier this month, said reaching an agreement with the country's commercial creditors, the international bondholders and China Development Bank was the key to achieving debt sustainability.