Sri Lanka’s government will take responsibility for loans taken out by state-owned enterprises from China as part of the country’s debt-restructuring plan, President Ranil Wickremesinghe said in parliament on Tuesday.
Wickremesinghe, who is also the finance minister, was delivering the national budget for 2023. He said that loans borrowed from the Exim Bank of China by some state-owned enterprises would be classified as government debt.
These companies include Ceylon Electricity Board, Sri Lanka Ports Authority, and Airport and Aviation Services. Sri Lanka would also take over the guaranteed foreign exchange debt owed by the Ceylon Petroleum Corporation.
Restructure Loss-Making State Companies
Wickremesinghe said the government will also restructure some “fiscally significant” state-owned enterprises—including Sri Lankan Airlines, Telecom, Colombo Hilton, Waters Edge, and Sri Lanka Insurance Corporation.Proceeds from the restructure will be used to strengthen Sri Lanka’s foreign reserves and currency, he added.
Japan holds 19.5 percent of Sri Lanka’s debt, while India holds 12 percent.
Wickremesinghe said that negotiations for a bailout package with the International Monetary Fund (IMF) are still ongoing. Sri Lanka has also initiated debt restructuring talks with India and China.
“A glimmer of hope on emerging from the economic abyss is currently visible, as a result of the strenuous and difficult policies we have been compelled to adopt during the past few months,” he said.
“After the era of waiting in queues for days and various protests, our distress has been eased to some extent, reaching a sense of satisfaction,” the president added.
Sri Lanka’s poverty rate increased from 13.1 percent in 2021 to 25.6 percent this year, according to the World Bank’s data.