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Lanka debt talks with India, China, Japan helped by investment projects: President

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ECONOMYNEXT –Sri Lanka has been moving forward in bilateral debt negotiations by talking to individual creditors despite a clearly defined process for dealing with Paris Club and other creditors, President Ranil Wickremesinghe had said last week.

Sri Lanka was following a ‘debtor led’ strategy by reforming the economy and also aiming at a ‘highly efficient green economy’, which was going to increase financing needs, Wickremesinghe told a financing summit for a New Global Financing Pact in Paris.

“What else helped us was that Sri Lanka had ongoing negotiations with Japan, India and China and separately regarding further trade integration and also regarding some of the development programs for the future,” President Wickremesinghe said. “This assisted our process.”

Sri Lanka was supported by the International Monetary Fund and also India who gave about four billion US dollars in 2022 he said when all other funding dried up.

Sri Lanka’s currency crisis intensified in 2022 after central bank open market operations depleted forex reserves and float (full suspension of convertibility) of the currency failed due to a surrender rule leading to the collapse of the rupee from 200 to 360 to the US dollar.

India had supported Sri Lanka with about four billion US dollars in the worst time, Wickremesinghe said.

Sri Lanka went through a period of ‘reserve graduation’ with the World Bank and Asian Development Bank making the country eligible for concessionary funding.

After a staff level agreement was signed with the IMF there was no clearly defined path to follow in bilateral debt restructuring with some lenders outside the Paris Club, the president said. Ninety percent of the menu options in the IMF program was agreed, he added.

The lack of a clearly defined path was a problem but a ‘common framework’ for middle income countries may also not help, because such efforts tended to move at the pace of the slowest creditor, he said.Under an ‘ad hoc’ arrangement, India and several countries had come to work with the Paris Club and China was an observer.

“We are able to work with the most committed creditors, raising the general quality and efficiency of the process,” Wickremsinghe said. “We are still frustrated by the lack of progress.”

Wickremesinghe said a new debt negotiation framework was needed since geopolitical tensions played a part, which cannot be solved by the debtor countries.

“The mistrust between US and China and the growing tensions has to be address by you all, not merely Sri Lanka and the country concerned,” Wickremsinghe said. “If you do not resolve it, Asia and Africa we will get caught into another situation not of our making. Restructuring is needed. But it has to move fast, otherwise LIC or MIC, the countries will not have much hope.”

A number of countries with highly unstable, depreciating, soft-pegged (flexible exchange rates) who had engaged in inflationary open market operations and covid monetary re-financed funding, are now in the brink of default.

Many of the countries had loaded up of sovereign debt as bond buyers went on a yield seeking spree as reserve currency quantitative easing (money printing) kept interest rates artificially low and China also busted some of its reserves on the Belt and Road project.



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Govt. extends ban on LTTE

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The NPP government has issued a new extraordinary gazette renewing and extending Sri Lanka’s long-standing ban on the LTTE and several Tamil diaspora organisations and individuals, continuing to designate them as “terrorists”.

The gazette, published recently, replaces a previous gazette issued in May 2025 and reaffirmed the proscription of a wide range of Tamil political and advocacy bodies operating around the world, alongside dozens of named individuals. The government alleged both the organisations and individuals listed are involved in “terrorism-related activities”.

The organisations blacklisted by the Sri Lankan government include:

• Liberation Tigers of Tamil Eelam (LTTE)

• Tamil Rehabilitation Organisation (TRO)

• Tamil Coordinating Committee (TCC)

• World Tamil Movement (WTM)

• Transnational Government of Tamil Eelam (TGTE)

• World Tamil Relief Fund (WTRF)

• National Council of Canadian Tamils (NCCT)

• Tamil Youth Organisation (TYO)

While the majority of the designations mirror those contained in the May 2025 gazette, the latest document updates identification details and addresses for a number of individuals and introduces at least one additional organisation to the list. All entries have been reissued under new reference numbers for 2026, though the underlying allegations and framing remain unchanged.

Successive governemnts have maintained a sweeping proscription regime against Tamil diaspora groups and individuals. A ban can make it a criminal offence for Sri Lankan citizens to maintain contact with these organisations or their members, severely restricting political engagement and stifling links between the diaspora and the Tamil homeland.

The original mass listings were introduced in 2014 under the administration of Mahinda Rajapaksa. Despite repeated outcry, subsequent governments have continued to uphold and renew the proscription regime, even after the Rajapaksas were voted out of power.

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Police obtain court order banning Wimal’s protest

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National Freedom Front (NFF) leader Wimal Weerawansa addresses a gathering outside the Education Ministry on Monday before launching a protest demanding the immediate resignation of Prime Minister Dr. Harini Amarasuriya as Education Minister over the inclusion of a link to an adult content website in the Grade 06 English module. (Pic by Thushara Atapattu)

Police yesterday (12) obtained an injunction order from the Kaduwela Magistrate’s court against the protest launched by National Freedom Front (NFF) leader and former Minister Wimal Weerawansa opposite the Education Ministry, Isurupaya, at Battaramulla.

Police informed Weerawansa of the court order. In line with the court order, the police informed Weerawansa that the road near the Ministry should not be obstructed and that no sound amplification equipment be used while the GCE Advanced Level (A/L) examination is in progress. The examination, put off due to Cyclone Ditwah, recommenced yesterday.

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Chinese Foreign Minister Wang Yi expresses optimism that Sri Lanka is on the right path to progres

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FM Herath with his Chinese counterpart Wang Yi

Minister of Foreign Affairs, Foreign Employment and Tourism Vijitha Herath held productive discussions with his Chinese counterpart Wang Yi today (12/01), during the latter’s brief visit to Sri Lanka.

The meeting aimed at further strengthening bilateral engagement and advancing the Strategic Cooperative Partnership between the two countries. Both Ministers reaffirmed the longstanding friendship and time-tested cooperation between Sri Lanka and China rooted in centuries of exchanges and consolidated since the establishment of diplomatic relations seven decades ago. The discussion also focused on enhancing partnership in the areas of trade, investment, development cooperation and tourism.

Minister Herath extended deep appreciation to the Government and the people of China for the steadfast support extended to Sri Lanka following cyclone Ditwah and requested further support for the second phase of resettlement, relocation and rebuilding, particularly for the restoration of affected infrastructure including identified roads, railways and bridges that are vital to connectivity, economic recovery and daily lives of people. Minister Wang assured China’s fullest support for this initiative and expressed confidence that Sri Lanka will continue its rapid recovery under the leadership of President Anura Kumara Disanayaka. He also welcomed the people-centric policies of the Government and expressed optimism that Sri Lanka is on the right path toward fulfilling aspirations of its people.

Minister Herath expressed appreciation for China’s constructive role in international fora and reiterated Sri Lanka’s firm commitment to the One China Policy and China’s sovereignty and territorial integrity.

Both Ministers also recalled the successful high level exchanges in the recent past, including visits of the President and the Prime Minister of Sri Lanka to China in 2025.

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