After getting close to China, then being stuck in China’s debt trap, Sri Lanka is still thirsty for the Chinese regime’s sweet poison.
On July 15, Bloomberg reported that Sri Lankan Acting President Ranil Wickremesinghe is seeking for the International Monetary Fund to provide financial support.
Sri Lanka’s federal government owes global funds roughly $12.6 billion in outstanding bonds.
According to a top envoy, Sri Lanka is continuing negotiations with China for $4 billion in aid. It is confident China will agree “at some point.”
Palitha Kohona, the ambassador of Sri Lanka to China, said in an interview with Bloomberg Television on July 15 that Colombo is seeking from China a loan of $1 billion to pay back an equivalent amount of Chinese debt becoming due this year.
In addition, Sri Lanka was seeking the activation of a $1.5 billion swap and a $1.5 billion credit line to pay for Chinese imports.
Kohona stated they had requested the same things from other creditors. Sri Lanka needed funding to stabilize its financial system.
Due to severe shortages of food and fuel, which have driven inflation to 70%, and monthly protests that forced President Gotabaya Rajapaksa to flee the nation. He resigned via email this month from Singapore.
According to Bloomberg, Kohona said that 10% of Sri Lanka’s external debt is owed to China (over $5 billion).
Acting President Wickremesinghe stated that Japanese loans are roughly about the same, but the interest rates on Chinese loans are higher.
Nikkei Asia cited Verite Research, a Sri Lankan think tank, who analyzed that the interest rate on Chinese loans was 3.3%, close to five times that of Japanese loans at 0.7%.
In 2017, the Sri Lanka government handed the Hambantota port of around 665 acres and a surrounding 15,000 acres to a Chinese firm named China Merchant Port Holding (CMPort) on a 99-year lease after failing to pay off the $1.4 billion debt. Through their agreement, CMPort owns 85% of the shares of the Hambantota International Port Group (HIPG).
A year later, the Chinese Embassy in Sri Lanka announced jointly building the Belt and Road “with a direct investment of $1.4 billion and a planned second-level Building Complex of $13 billion.”
Nikkei cited Sri Lankan economist Sarubananthan in that year, “We will continue to rely on China for direct investment.”
Finally, Sri Lanka is one of ten countries involved in China’s Belt and Road, which has declared bankruptcy. This April, the Sri Lankan government announced that it had stopped all payments on government bonds.
In conclusion, Sri Lanka is facing a severe economic crisis and months-long civil protests. Its former President Rajapaksa was forced into exile. All the chaos mentioned above and inflation reflect strapping into Chinese debt traps. However, Sri Lanka is still thirsty for the Chinese regime’s sweet poisonous wine.