Connect with us

South Asia

Chinese Debt Trap: Sri-Lanka Takes More Loan From Beijing, Sinks Further In Chinese Trap

Published

on

Amid the global pandemic, as Sri Lanka battles the COVID-19, it is moving towards another looming crisis – the Chinese Debt Trap, that is servicing its debt due this year. 

Beijing granted a loan of $500 million as a bailout to fight the COVID-19 pandemic when Sri Lanka’s foreign reserves diminished to $7.2 billion in April. Last week, another decision to borrow 15 billion Sri Lankan rupees ($80 million) from the China Development Bank was approved by the cabinet ministers. This loan is intended to be used to improve 105 kilometers of roads in the country. 

The world is looking at a financial crisis and this decision to avail a loan is slammed by the critics of Sri Lanka’s government considering that the country is already debt-ridden with a huge amount of loan from China.

“Such projects are not priorities for the moment. This loan is just to improve roads already built, and we can always improve the roads later,” said Harsha de Silva, Former minister for economic reform. 

Earlier, Sri Lanka had relied heavily on China to construct $1.5 billion port in Hambantota in the country’s south. After the port was operating at a loss and couldn’t generate enough revenue to repay the loan to Beijing, the port was leased to China for 99 years in return for $1.1 billion which eased its position.

According to the estimates by the International Monetary Fund (IMF), Sri Lanka’s net government borrowing, which combines the fiscal deficits of the central and regional governments, will rise to 9.4% of the gross domestic product in 2020, up sharply from last year’s 6.8%, due to the economic impact of the epidemic.

In February, IMF conducted a visit to Sri Lanka to discuss the economic reforms agenda with the authorities. After the visit, the IMF concluded that the economy is gradually recovering from the terrorist attacks last April.

Real GDP growth was estimated at 2.6 per cent in 2019. The recovery is supported by a solid performance of the manufacturing sector and a rebound in tourism and related services in the second half of the year.

High-frequency indicators continue to improve and growth is projected to rebound to 3.7 per cent in 2020, on the back of the recovery in tourism, and assuming that the Novel Coronavirus will have limited negative effect on tourism arrivals and other economic activities. 

Last month, Sri Lanka’s currency fell at an all-time low of 200.6 rupees to a dollar. Subsequent to this, the Finance Ministry restricted the imports of 156 items including alcohol, food and apparel in April. 

China’s ambassador to Sri Lanka, Hu Wei at a meeting with President Rajapaksa said that China is keen to help and would help “revive” the economy because Sri Lanka is a “special friend”. Rajapaksa responded by saying that “there are ample opportunities for foreign investments. … I invite China and other countries to make use of those opportunities”. 

“We are also confident that countries such as China and Japan will provide us with much-needed space due to the current situation,” said Ramesh Pathirana, a cabinet spokesman.

Advertisement
Advertisement

Facebook

FEATURED

Operation-Tupac Operation-Tupac
Asia Pacific6 hours ago

India-China Deteriorating Ties Could See ‘Adverse Impact’ On China-Pakistan Economic Corridor

Beijing’s flagship programme, the China-Pakistan Economic Corridor (CPEC) worth approximately $62 billion, has already received criticism from India and the...

CHINA-PAKISTAN CHINA-PAKISTAN
Featured10 hours ago

China-Turkey-Pakistan Alliance Dangerous For India Diplomatically, Economically & Militarily

While all eyes have been on India and China after the recent scuffle in Ladakh, experts have warned that Indian...

Operation-Cactus-Maldives-India Operation-Cactus-Maldives-India
Featured10 hours ago

Meet The Cheetah-Hearted Indian Air Force Pilot Who Few Her Cheetahs From LOC to Bollywood

"In the initial phase, the small but sturdy Cheetah helicopters that have an established record in high-altitude flying are sent...

Trump-Putin-Meeting Trump-Putin-Meeting
Americas1 day ago

Kremlin Warns The US Of Nuclear Retaliation If Russia Or Her Allies Are Targeted

In a veiled warning to the US, Russia has issued a statement declaring that it will perceive any ballistic missile...

BLAST-BOMB BLAST-BOMB
Featured1 day ago

Beirut Blast Alert For Chennai: 700 Tonnes Of Ammonium Nitrate Stuck In Indian Port

Almost 700 tonnes of ammonium nitrate, the substance that caused the mega-explosion in Lebanon, has been stuck in an Indian...

SAAB-GRIPEN SAAB-GRIPEN
Featured1 day ago

Did India Miss A Trick By Rejecting ‘Stealth Killer’ Saab Gripen For Rafale & Sukhoi Jets?

The Gripen E has been ordered by both Sweden and Brazil. Other Saab Gripen fighters have been sold to Hungary,...

israel-tanks israel-tanks
Featured1 day ago

Israel’s Latest ‘Carmel’ Tanks To Have X-Box Controllers, F-35 Style Cockpit

IAI’s Carmel entry presents a vehicle capable of fully autonomous, semiautonomous, and manual driving modes. It can also automatically engage...

china-detention-camps china-detention-camps
Featured2 days ago

Pakistan Concerned For Muslims In Kashmir But Apathetic Towards Chinese Uighur Muslims

But even amid a harsh crackdown on the Uighur population in China's Xinjiang region, Pakistan PM Imran Khan has refused...

Tank Tank
Featured2 days ago

Heavy-Weight T-90 Tanks Deployed In Ladakh Not To Defend But To Threaten Chinese Territories – Experts

“They (T-90s) are not there to defend Indian territory, but to threaten Chinese territory,” said a fellow at the U.S.-based National...

AFGHAN-HOSPITAL-ATTACKS AFGHAN-HOSPITAL-ATTACKS
Americas2 days ago

Afghanistan: US Urges Afghan Government To Release 400 Taliban Prisoners Including 150 On Death-Row

US Secretary of State Mike Pompeo has urged prominent Afghans holding a major meeting Friday to free Taliban prisoners, promising...

Advertisement