USAID chief calls on China to restructure Sri Lanka’s debt

NEW DELHI (AP) — The head of the U.S. government’s aid agency on Wednesday called on China to help Sri Lanka and other countries that had borrowed heavily from Beijing with debt restructuring, not just loans. lines of credit and emergency loans.

Samantha Power, the administrator of the US Agency for International Development, contrasted India’s “critical” measures to help Sri Lanka during its worst economic crisis with the two decades in which China offered ” opaque loan agreements at higher interest rates than other lenders” and funded infrastructure projects that often had little practical use.

“The biggest question is whether Beijing will restructure its debt to the same extent as other bilateral creditors,” she said during a visit to India, warning that the crisis in Sri Lanka, although it either the result of different factors, was not unique. Similarly, several countries in Africa and Asia hoped that their calls for debt restructuring would be answered.

“It’s really critical that Beijing participate in debt relief in a transparent and fair way with all other creditors,” Power said.

Sri Lanka is bankrupt and has suspended repayment of its $51 billion in foreign loans. The crisis has led to severe shortages of fuel, cooking gas and medicine and long queues for essential supplies, leading to massive protests and the ousting of President Gotabaya Rajapaksa.

The government is preparing a debt restructuring plan, a condition of a rescue plan that it is negotiating with the International Monetary Fund. China, which accounts for 10% of Sri Lanka’s debt, has resisted offering debt relief.

As climate shocks hit the economies of countries already hit by the pandemic and war in Ukraine, worsening global food and fuel shortages, Power highlighted protests related to food and fuel prices in more than one dozen countries as inflation soars.

“If history is any guide, we know that the government of Sri Lanka is unlikely to be the last to fall,” she said.

Power visited East Africa earlier this month to highlight the hunger crisis in the region where more than 50 million people are expected to face acute food insecurity This year. She said millions of tonnes of grain and oil, essential for driving down global food prices, were stuck in Ukrainian seaports due to Russia’s Feb. 24 invasion.

She said India’s “voice and diplomacy” were crucial to negotiate the deal to pave the way for the export of grain from Ukraine. But with Russian missiles hitting Ukraine’s Black Sea port of Odess hours after it was signed, she admitted the deal was “very up in the air”.

At a press conference after his speech, Power said Russia’s acceptance of a deal was a “better circumstance” than the alternative, but added that the only way for these grains to reach markets was for Russia to allow their transport without attacking them.

“So far what we have seen from the Russian Federation is a series of lies and broken promises,” she said, adding that it was crucial for all countries, not just states United States or India, to oblige Russia to respect the terms of the agreement. OK.