Sri Lanka shunned an IMF bailout Wednesday, showing intent to acquire a new loan from China to ameliorate the economic crisis which has led to food and fuel shortages. 

Colombo's economy, which is dependent on tourism, has experienced a devastating downturn due to the effect of the pandemic. During the crisis, supermarkets have been rationing goods and civilians power blackouts because power utilities have not been able to pay imported fuel expenses. 

Sri Lanka has $35 billion in foreign debt. To tackle this, the country has closed some of its foreign missions and has resorted to paying the debt in Ceylon tea. 

Sri Lanka's governor of the central bank Ajith Nivard Cabraal rejected local and international economists' calls to go for an IMF bailout and debt restructure solution to the crisis, implying the repercussions of an IMF loan are quite detrimental.

"The IMF is not a magic wand," he told a news conference in Colombo. "At this point, the other alternatives are better than going to the IMF."

Colombo looks to Beijing 

Cabraal reveals that Colombo-Beijing talks for a new loan are at an "advanced stage," and that a new agreement will service existing debt to Beijing. 

"They would assist us in making the repayments... the new loan coming from China is in order to cushion our debt repayments to China itself," he said.

China accounts for at least 10% of Sri Lanka's external debt. 

Recently, Chinese Foreign Minister Wang Yi visited Sri Lanka, meeting President Gotabaya Rajapaska, to discuss debt repayment structuring. 

No indication of the size of the loan was given by Cabraal, though he said that talks were underway with India for a $1 billion credit line to fund imports. The governor, furthermore, said that Sri Lanka will be repaying a $500 million sovereign bond that matures next Tuesday, despite many economic experts telling him to seek IMF assistance.