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POSTED AT 06:18 PM 12-09-2018

Sri Lanka is not falling into a Chinese debt trap: PM

Image Courtesy: Daily News

Prime Minister Ranil Wickremesinghe, who is in Vietnam, has said he didn't believe that Sri Lanka was falling into a debt trap caused by high-interest Chinese loans.

On the sidelines of the World Economic Forum on ASEAN in Hanoi on Tuesday, Mr. Wickremesinghe has told the CNBC that,“We are dealing with China. There are a fair amount of Chinese investments. There are China loans…I can't see it as a threat,”

The Premier has also denied the often cited claim that Sri Lanka was ceding control of strategically vital ports to Chinese control.

He has said the government inherited debt racked up through the mismanagement of the prior administration.

"We took over the government and stabilized the economy ... they ran away, we were the only ones left," he said.

Meanwhile, he said Sri Lanka is not under "threat" from growing China-US trade tensions, despite Sri Lanka’s reliance on Chinese investment.

Despite concerns voiced earlier this month by ratings agency Fitch about a "challenging" external debt servicing outlook and political uncertainty following regional polls, Mr. Wickremesinghe has said he didn't believe Sri Lankan sovereign bonds were on the verge of a downgrade.

"We and many others are running deficits in Asia and that certainly would be a matter of concern, but so far we have been able to negotiate with the rating agencies and it has certainly not affected our borrowing capacity," he said.

Japanese bank Nomura Holdings on Monday identified Sri Lanka as one of 30 emerging markets most susceptible to an exchange rate crisis, a claim vehemently denied by Sri Lanka's central bank and Mr.Wickremesinghe, who called it "false."

Sri Lanka, bailed out by the International Monetary Fund (IMF) in 2009 and mid-2016, should not need further support from the global lender, the prime minister said.  

"We have been going to the IMF a bit too often ... Sri Lanka and Pakistan, and I hope that we will be able to manage. The IMF saved us at a crucial period, I must acknowledge it, but we must learn now to go on our own," he said.

Meanwhile, Mr.Wickremesinghe has said he "can't see an early election."

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