China has assured Sri Lanka that it will back the country in going to the IMF for support, said Mr Gotabaya Rajapaksa
Colombo June 7 2022: China appears to be shifting its strategic focus towards South-east Asia and Africa, Sri Lanka’s President Gotabaya Rajapaksa said, noting that South Asian countries in financial trouble aren’t getting the same attention from Beijing as before, reported by Bloomberg.
In an interview on Monday (June 6), Mr Rajapaksa said that Sri Lanka couldn’t tap a US$1.5 billion (S$2.07 billion) credit line from Beijing and has yet to hear back on his request to President Xi Jinping for a US$1 billion loan to buy essential goods.
He said China indicated it would help Sri Lanka, while adding that “usually they don’t like” lending out more money to cover earlier debt payments.
“My analysis is that China has shifted their strategic focus into South-east Asia,” Mr Rajapaksa said in an interview at his official residence in Colombo.
“They see more strategic interest in Philippines, Vietnam and Cambodia, that region, and Africa.”
“They have less interest in this region,” he added. “I don’t know whether I am right or wrong, even the focus on Pakistan has gone down. That shows that their interest here is not like earlier. Their interest has shifted to two other areas.”
Sri Lanka and Pakistan have been some of the biggest recipients of China’s largesse over the past decade, with Beijing extending billions of dollars in credit to build ports, power plants and other infrastructure.
In recent months, however, Beijing has taken its time reissuing a loan to Pakistan and has hesitated in responding to Sri Lanka’s request for fresh credit as the International Monetary Fund negotiates lending programmes with both nations.
China has assured Sri Lanka that it will back the country in going to the IMF for support, Mr Rajapaksa said, moving in step with the US, India, Japan and Australia.
More importantly, he added, China has indicated that it will not insist on preferential repayment of loans and is willing to treated as at par with other creditors of Sri Lanka.
Sri Lanka and Pakistan have both seen changes of government in recent months, with Mr Rajapaksa removing his brother, Mahinda Rajapaksa, as prime minister following weeks of sometimes-violent street protests over shortages of essentials like food, fuel and medicine.
Pakistan’s new government, which took power in April, has hiked petrol pump prices to meet a key IMF condition – a move that ousted leader Imran Khan is seeking to capitalise on to return to power in an election that must be held before next August.
Sri Lanka has reached out to the IMF and major Asian economies for assistance as it battles the worst economic crisis since independence in 1948. Yet China has stopped Sri Lanka from tapping an existing US$1.5 billion credit line on concerns the IMF may designate this as a loan and add it to the debt stock, a government adviser said last week, adding that decision may force delays in repayment.
India went out of its way to push the IMF to expedite the process, Mr Gotabaya Rajapaksa said, adding that he wrote letters and spoke to President Xi and Prime Minister Narendra Modi.
The Sri Lankan leader also said he personally reached out to counterparts in the Middle East to secure long-term oil supplies to alleviate shortages due to a lack of dollars.
Mr Gotabaya Rajapaksa said the main mistake Sri Lanka made was waiting too long to go to the IMF on the expectation that tourism and remittances would recover before reserves diminished significantly.
“If we had gone at least six months or one year earlier, it would have not come to this state,” he said.
