Sri Lankan President Anura Kumara Dissanayake announced on Saturday that he will visit China next month for discussions, marking a significant diplomatic engagement following the country’s recent foreign debt restructuring.
China, Sri Lanka’s largest bilateral lender, held over half of the island nation’s bilateral debt during its 2022 economic crisis. The crisis left Sri Lanka unable to pay for essential imports like food, fuel, and medicines due to a severe foreign exchange shortage.
The economy is now recovering, bolstered by an International Monetary Fund (IMF) bailout package and strict austerity measures designed to stabilize government finances.
Dissanayake, a leftist leader who assumed office in September with a strong anti-corruption platform, has solidified his political authority following a landslide victory in snap parliamentary elections.
“I will be going to China mid-next month,” he told reporters, though he did not specify an exact date.
Strengthening Regional Alliances
This will be Dissanayake’s second foreign trip as president, following his visit to India on December 16, where he was warmly received by Prime Minister Narendra Modi. India and China, both vying for strategic influence in the Indian Ocean region, view Sri Lanka as a key player due to its location along one of the world’s busiest maritime trade routes.
India remains wary of China’s expanding presence in Sri Lanka, which it perceives as a challenge to its regional dominance.
Fitch Ratings Upgrade
Sri Lanka’s recent economic progress earned recognition from Fitch Ratings, which upgraded the country’s long-term foreign currency issuer default rating to CCC+ on Friday. Fitch highlighted that debt restructuring had alleviated the government’s immediate debt service pressures and liquidity risks. However, it warned that general government debt-to-GDP and interest-to-revenue ratios are likely to remain high in the medium term.
Dissanayake’s upcoming visit to China underscores Sri Lanka’s ongoing efforts to stabilize its economy and strengthen bilateral ties with its key lender.
