Sri Lanka’s crisis-hit President Gotabaya Rajapaksa is calling on the Chinese regime to restructure his country’s multi-billion dollar debt to China under the Belt and Road infrastructure megaproject (BRI), through which the regime grants usurious loans at unpayable rates to low-income countries.
In the last decade, China has lent Sri Lanka more than $5 billion, representing about 10% of the country’s total foreign debt, for projects including roads, an airport and ports.
Gotabaya Rajapaksa made the request last Sunday, Jan. 9, during a meeting with Chinese Foreign Minister Wang Yi, at a time when Sri Lanka is experiencing an unprecedented economic collapse.
“The president pointed out that it would be a great relief to the country if attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the COVID-19 pandemic,” Rajapaksa’s office said after his meeting with Wang.
As indicated by Reuters, Rajapaksa also asked China to provide “favorable terms” for its exports to Sri Lanka, which amounted to some $3.5 billion in 2020, the statement said, but gave no further details.
It further transpired Wednesday, that Sri Lanka ruled out an IMF bailout and plans to seek another loan from China to address the economic crisis.
“The IMF is not a magic wand,” central bank chief Ajith Nivard Cabraal told a news conference in Colombo. “At this point, the other alternatives are better,” he added, rejecting calls by local and international economists to seek a bailout from the international body.
Sri Lanka has benefited from billions of dollars in loans under the BRI in what many call the “debt trap,” but now the island nation is in the midst of an exchange rate crisis that puts it on the brink of default, analysts say.
“China has always helped Sri Lanka develop its economy as best as we can,” Foreign Ministry spokesman Wang Wenbin told a daily briefing in Beijing on Monday.
“We will continue to do so in future.”
But Sri Lanka has a devastating track record for a loan from the Chinese regime and is still not learning its lesson. In December 2017, it lost the Hambantota seaport for defaulting on one of its loans to a Chinese bank.
The Belt and Road initiative began in 2013 as a CCP project to communicate China directly with Europe, but then spread to South America and Africa. And it is a strategic method used by the regime to appropriate other countries’ assets and increase its power.