Sri Lanka asks China to defer debt repayments due to economic crisis

Sri Lanka on Sunday, January 9 sought to reschedule the payments of its mounting Chinese debt in view of the sluggish economy due to the novel coronavirus pandemic. During the talks with the visiting Chinese foreign minister Wang Yi, President Gotabaya Rajapaksa requested his Chinese counterpart to defer the payments of the loans that the cash-strapped Southeast Asian nation is unable to pay. The President of Sri Lanka, therefore, asked China for the restructuring of its loans as well as the access to preferential credit for imports of essential goods, Associated Press reported. Furthermore, the agency reported that Sri Lanka’s Beijing-financed projects don’t generate revenue and hence the country now needs the concessionary credit facility for imports so that the industry can operate without disruption. 

President Gotabaya Rajapaksa told visiting Chinese Foreign Minister Wang Yi 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,”  a statement from Sri Lankan President’s office read on Sunday. 

Sri Lankan President Gotabaya Rajapaksa, Chinese Foreign Minister Wang Yi, inspect the Chinese-funded sea reclamation Port City project in Colombo, Sri Lanka. (Image: AP/Eranga Jayawardena)

Sri Lankan leader also requested Chinese Foreign Minister Wang Yi for assistance in order to restart the Chinese travel to Sri Lanka within a secure bubble amid the pandemic for the country to secure revenue out of tourism. During his visit, the Chinese minister accompanied the Sri Lankan Prime Minister Mahinda Rajapaksa, the president’s brother to Colombo’s Port City, the reclaimed island built with Chinese investment.

China and Sri Lanka launched 65 boats in the waters to commemorate the 65 years of diplomatic bilateral relations. In his speech at Port City Wang agreed that the COVID-19 pandemic has made economic recovery difficult but did not announce any relief measures. Chinese foreign minister arrived in Sri Lanka during his multi-national trip from the Maldives. His trip includes visits to Eritrea, Kenya, and Comoros in East Africa.

Chinese Foreign Minister Wang Yi attends a bilateral meeting with Sri Lankan Prime Minister Mahinda Rajapaksa in Colombo, Sri Lanka. (Image: AP/Eranga Jayawardena)

China's 'debt trap' policy

China has carried out several infrastructure projects in Colombo as the country's leadership invited the Chinese communist regime to implement its ambitious expansionist Belt and Road project with several projects, a matter that has long caused concerns in India. Columbo, now unable to pay the debt back would be recent in the Chinese 'premeditated scheme' of a  debt trap, like the Panama that shifted to Beijing's domino effect, and some 15 Latin American nations that also welcomed China’s BRI, according to reports.

Beijing has been on the aggressive campaign of pursuing a global infrastructure under the B&R Initiative. Several nations like Sri Lanka have borrowed millions in loans for large-scale infrastructural projects with Chinese firm involvement. Last year, after Uganda was unable to pay its debt to China, a US$207M loan that it took in November 2015 from the Chinese Exim Bank, China struck an agreement that would require the country to surrender its only international airport to the Chinese lenders. 

"Ugandan government has failed to convince the Chinese lenders to renegotiate the toxic clauses of the 2015 loan, leaving Ugandan President, Yoweri Museveni’s administration in limbo," Guayana news agency Kaieteur reported. It cited the Uganda Civil Aviation Authority (UCAA), as rebuking China for some provisions in the Financing Agreement that "required the Entebbe International Airport and other Ugandan assets to be attached and taken over by Chinese lenders upon arbitration in Beijing." 

Image: AP