Harsha de Silva, Sri Lankan MP, on Sunday spoke about the Chinese investments in Sri Lanka and its relation to the current economic and political crisis and said the only thing left to do is to figure out a way out of the debt trap.
Speaking to India Today, the Samagi Jana Balawegaya (SJB) party leader said, “What is done is done. We can’t undo the projects now. What we can do now is to figure out a way to come out of the debt. We have to restructure it and we have to talk to the Chinese and come to a solution.”
For years together, Sri Lanka has been borrowing heavily from other countries due to years of budget shortfalls and trade deficits. The country also saw several infrastructural projects that were built using foreign investments, failing to bring in any revenue. This pushed the country further into debt.
Many of these projects, like the Rajapaksa airport, Hambantota port, a conference hall, the Colombo lotus tower are funded by China and Chinese businesses and at the same time, these projects now stand as reminders of mismanagement of funds.
The Belt and Road Initiative of the Chinese government has been criticised by several experts around the globe as an initiative that targets vulnerable countries and leads these nations into debt traps.
According to reports, 10 per cent of the $51 billion external debt that Sri Lanka owns is to China and it is believed that the amount will be much higher if the loans given to state-owned firms and the Central Bank of Sri Lanka are also considered.
During the Sri Lankan civil war, it was China who lended a helping hand, but this was not just a neighbour helping another neighbour in crisis but a well chalked out strategy to get a strategic upper hand in the Indian ocean region.
This is very clear from the Chinese investments in Hambantota, the home district of the Rajapaksas. The Hambantota sea port, envisaged as one of the world’s busiest east-west shipping lanes, only proved to be a disaster with very few takers. The port project was mired in controversy with allegations of corruption against the Rajapaksa family members. The Rajapaksa airport too failed to generate desired results.
In 2017, Hambantota port was given to a Chinese state-owned company on a 99-year lease as Sri Lankan government was struggling to repay the loans. A port city project being built on 665-acre land, with the aim of becoming a financial hub in the capital of Colombo, is also seen as one which might push the island nation further into debt trouble.
“Some middle ground where we can manage our debt repayment sustainably. We can’t change the past,” Silva said of the many infrastructural projects that failed to bring revenue.
This raises the question: Is Sri Lanka’s biggest bilateral lender pushing the island nation into a debt trap?