by Our Diplomatic Affairs Editor
In a statement on Thursday, President Ranil Wickremesinghe emphasized that there can be “no exceptions” to the ongoing discussions regarding the reduction of the country’s debt burden. Wickremesinghe urged China, Sri Lanka’s largest creditor, to be part of the multilateral framework established for these talks. China had initially declined to join the negotiations initiated in early May by creditors such as Japan, France, and India, causing concerns about the outcome of the discussions.
Speaking to local media in Japan on the sidelines of Nikkei’s annual Future of Asia forum, President Wickremesinghe revealed that Sri Lanka had sought to include China on the common platform for debt negotiations. However, China expressed a preference to remain separate from the multilateral process. The Sri Lankan President dismissed speculation that China might be seeking a separate and more advantageous deal for itself, emphasizing that there would be no separate agreements. Wickremesinghe stressed that all negotiations would be conducted based on the same principles, without favouring any particular party.
Sri Lanka, a small island country in South Asia, currently carries a public debt of $80.7 billion, with bilateral debt accounting for approximately $11.1 billion. China holds the largest share of the bilateral debt, amounting to 40%. Despite being present as an observer during the May talks, China did not actively participate. The default of Sri Lanka in May the previous year, the first of a middle-income nation, occurred when the country failed to repay infrastructure funds provided by China and other countries. Sri Lanka’s debt burden has been exacerbated by interest rate hikes in the United States and other wealthier nations.
President Wickremesinghe expressed confidence that the ongoing talks would be concluded by September, covering both domestic and external debt, as previously promised by the nation. He mentioned the intention to reduce some debts and extend the repayment periods for others. Acknowledging another major challenge, Wickremesinghe highlighted the issue of inflation in Sri Lanka. The national consumer price index surged by 49.2% in March. However, the President revealed that the central bank of Sri Lanka had assured him that inflation would decrease to single-digit figures by the end of the year, and he expressed confidence in meeting that target.
Shifting focus to internal matters, President Wickremesinghe touched upon a controversial anti-terrorism draft bill that has recently sparked criticism due to concerns that it could be utilized to suppress protests. Wickremesinghe stated that the majority of the population supports this law. He emphasized that the bill would have prevented some reported cases of torture, as it grants magistrates access to suspects in detention. The President also mentioned the release of numerous prisoners previously held under the current terrorism law, noting that only a handful remained in custody.
President Ranil Wickremesinghe’s firm stance on inclusive debt negotiations and his call for China’s participation highlight Sri Lanka’s determination to address its financial challenges through a multilateral approach. The nation’s efforts to reduce debt and combat inflation, along with the proposed anti-terrorism draft bill, continue to shape the economic and political landscape of Sri Lanka.