Sri Lanka Urges China to 'Dramatically Change' Its Stance on Debt as Talks With IMF Begin

Sri Lankan government data suggests that out of $51 billion in foreign debt, loans from China constitute around 10 percent. In comparison, Western-led financial institutions and venture capital hold approximately 80 percent of the debt. The island nation of 22 million people has been facing a severe fuel and food crisis for months.

Sri Lanka's President Ranil Wickremesinghe has urged China to "dramatically change" its stance on debt relief as the island nation is negotiating hard with creditors to revive the troubled economy.

The statement came as the International Monetary Fund (IMF) insisted on an assurance by Sri Lanka's creditors that debt sustainability will be restored.

"We have informed the Chinese government [of] the need to restructure [the debt] and the need for all the creditors to sing from the same hymn sheet," Wickremesinghe told Nikkei on Wednesday.

On the eve of beginning of the second round of the negotiations for a multibillion-dollar bailout package for Sri Lanka, the Washington-based lender said that Sri Lanka's public debt is assessed as unsustainable.

The $81 billion Sri Lankan economy owes $51 billion to foreign lenders. Western wealth funds and multilateral institutions hold around 80 percent of the total debt, data form the country's Department of External Resources suggests.

China, Japan, and India have provided around $14 billion in loans to the island nation.

Due to the balance of payments crisis, the country of 22 million defaulted on repayment for this year.

The shortages of essential items triggered massive protests in Sri Lanka, forcing President Gotabaya Rajapaksa to flee the country on July 14 and resign from his post.