China turns down request for US$ 1.5bn swap deal

The Chinese Government has ruled out the possibility of entering into a US$ 1.5 billion swap arrangement with Sri Lanka on the basis that Sri Lanka may not be able to fulfil its conditions.

The Chinese government’s position was conveyed when Sri Lanka’s Ambassador Palitha Kohona met China’s Asian Affairs Department Director General Liu Jinsong in Beijing, a senior official said.

The ambassador was told that Chinese Financial Institutions  were concerned about the likely violation of the terms and conditions.

The Chinese official also had explained that China itself was experiencing an economic slowdown and a liquidity problem posed by internal and external factors, including the US-imposed sanctions.

The response from China came at a time when Sri Lanka was banking on the Chinese swap deal and  financial arrangements with other foreign countries and agencies.

However, during the talks, the Chinese official said that Sri Lanka’s request for a buyer’s credit facility of US$ 1.5 billion was under consideration.

Sri Lanka earlier received RMB 500 million from China as urgent humanitarian assistance by China International Development Cooperation Agency (CIDCA). In addition, aid collected through temples, schools and other charitable organisations was sent to Sri Lanka..

Meanwhile, Mr Liu told Mr. Kohona that China could consider supplying diesel and fertiliser if a formal request was made through the External Resources Department of Sri Lanka.

Sunday times.

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