Sri Lanka president urges debt relief to help green transition

Sri Lanka President Ranil Wickremesinghe

Sri Lanka’s president on Wednesday said debt relief for low-income countries should be part of the green transition and inaction on debt could pose an existential threat to China’s Belt and Road Initiative.

Speaking at a panel on greening the Belt and Road Initiative in Beijing, President Ranil Wickremesinghe said Sri Lanka’s Climate Prosperity Plan requires investment of $26.5 billion through to 2042 and its roadmap for carbon neutrality needs $100 billion through to 2050.

“These are a very heavy burden for Sri Lanka, but we are determined somehow to ensure that we can mobilise the resources,” he said. “But this is not the case in all countries, a number of countries are unable to find the necessary financial resources to fund the transition.”

“Our proposals in this field should include debt relief for low-income countries,” he added, reminding delegates that many poorer countries are struggling to repay debt.

Sri Lanka defaulted on its foreign debt in May last year after its dollar reserves fell to a point where the island nation of 22 million people could no longer pay for essential imports such as fuel and medicine.

Sri Lanka owes Chinese lenders – bilateral and commercial – around $7 billion.

“If we do not address these issues this year, then I do not know whether we could even have another conference in three or four years time,” Wickremesinghe added.

The island nation reached an agreement with the Export-Import Bank of China last week covering about $4.2 billion of outstanding debt but is still working with other key bilateral creditors including Japan and India on reaching a debt restructuring plan.

Wickremesinghe said development banks such as the Asian Infrastructure Investment Bank should also “mobilise” additional funding.