Logo of Phnom Penh Post newspaper Phnom Penh Post - Sri Lanka seeks Chinese help to save crashing economy



Sri Lanka seeks Chinese help to save crashing economy

Content image - Phnom Penh Post
Chinese Foreign minister Wang Yi looks at a sailing event on the occasion of the 65th anniversary of diplomatic relations between the Sri Lanka and China during his visit to Colombo Port city project, in Colombo on Sunday. AFP

Sri Lanka seeks Chinese help to save crashing economy

Cash-strapped Sri Lanka sought to reschedule its huge Chinese debt burden in Sunday talks with visiting foreign minister Wang Yi, the president’s office said.

The island’s tourism-dependent economy has been hammered by the pandemic and its depleted foreign exchange reserves have led to food rationing at supermarkets and shortages of essential goods.

Key ally China is Sri Lanka’s biggest bilateral lender and Wang’s visit comes after a warning from international ratings agencies that President Gotabaya Rajapaksa’s government could be on the brink of default.

“The President pointed out that it would be a great relief if debt payments could be rescheduled in view of the economic crisis following the pandemic,” Rajapaksa’s office said in a statement.

There was no immediate comment from the Chinese embassy in Colombo.

Sri Lanka’s foreign reserves had dropped to just $1.5 billion at the end of November – enough to pay for only about a month’s worth of imports.

The island’s main energy utility began rationing electricity on Friday after running out of foreign currency to import oil for its thermal generators.

China accounted for about 10 per cent of Sri Lanka’s $35 billion foreign debt to April 2021, government data shows.

Officials said China’s total lending could be much higher when taking into account loans to state-owned enterprises and the central bank.

Sri Lanka has borrowed heavily from China for infrastructure, some of which ended up as white elephants.

Unable to repay a $1.4 billion loan for a port construction in southern Sri Lanka, Colombo was forced to lease out the facility to a Chinese company for 99 years in 2017.

The US and India warned that the Hambantota port, located along vital east-west international shipping routes, could give China a military toehold in the Indian Ocean.

Both Colombo and Beijing have denied that Sri Lankan ports will be used for any military purposes.

Wang arrived in Sri Lanka on the night of January 8 after visiting the nearby Maldives, in the final leg of his first foreign tour of 2022 which has also taken him to Eritrea, Kenya and the Comoros.

China offered the Maldives infrastructure maintenance, medical aid and visa concessions as Beijing moved to strengthen its connections with the strategically placed archipelago.

MOST VIEWED

  • Hun Sen: Stop Russia sanctions

    Prime Minister Hun Sen said sanctions against Russia as a result of its military offensive in Ukraine should be stopped as they have produced no tangible results, and predicted that a global food crisis would ensue in 2023 as a consequence. Speaking to an audience at

  • Chinese tourists 2.0 – Coming anytime soon?

    Regional tourism is grappling with the absence of the prolific travellers and big spenders – the Chinese tourists. Cambodia, which has welcomed over two million Chinese tourists before Covid-19, is reeling from the economic loss despite being the first to fully open last November ‘To put

  • PM reflects on shoe throwing: Free speech or act of violence?

    Prime Minister Hun Sen on May 17 questioned whether a man who threw a shoe at him while he was in the US was exercising freedom of expression or if it was an act of hostility. Hun Sen was referring to an incident last week when

  • Siem Reap’s Angkor Botanical Garden opens

    The Angkor Botanical Garden was officially opened on May 19 with free entry for both local and international visitors for the first six weeks. The garden was established on a nearly 15ha plot of land in Siem Reap. “After the first six weeks, Angkor Botanical Garden

  • Pub Street on the cards for Battambang

    The Battambang Provincial Authority has announced that it is considering establishing a Pub Street in the area around the heritage buildings in Battambang town in a bid to attract more tourists. Battambang provincial governor Sok Lou told The Post that the establishment of a Pub

  • Hun Sen: Don’t react to hostility

    Prime Minister Hun Sen urged tolerance and thanked members of the Cambodian diaspora for not reacting to the hostility on display towards him by others while he was in the US to attend the May 12-13 ASEAN-US Special Summit in Washington, DC. In an audio