Sri Lanka’s Foreign Debt Trap

Is Sri Lanka’s Foreign Debt a China’s Debt Trap? Many in the West propagate this is the case, so how much is Sri Lanka’s Foreign Debt and what are their breakdown?

The following chart tells the story:

China is not the biggest lender to Sri Lanka. The following are the debts that Sri Lanka has:

Market borrowings: $16.38 billion

China: $3.39 billion

ADB: $4.42 billion

Japan: $3.36 billion

World Bank: $3.23 billion

India: $859 million

Others: $3.04 billion

China’s loans only accounts for about 10% of Sri Lanka’s debts, almost similar to Japan.

Secondly, Sri Lanka has not lost its Hambantota port to China. China has a 99 year lease of the port, at $1.12 billion, in a JV with Sri Lanka Port Authority.

Sri Lanka benefits from the employment of its people at the port and can collect tax from their income, as well as a 30% share of profits.

The history:

At Sri Lanka’s request, China developed the Hambantota Port at a cost of $1.5 billion. Upon completion, the port was managed by the Sri Lanka Port Authority (SLPA). However, from 2010 to 2017, the port was running at a loss and Sri Lanka could not pay back their loan to China.

Following this, Sri Lanka agreed to form a JV company with China to run the port. China Merchants Port (CM Port) holds 70% and SLPA holds the remaining 30%. This JV will run the port for the next 99 years.

CM Port then paid $1.12 billion to Sri Lanka.

Sri Lanka also received from China $292 million in December 2017 and another $97 million in January 2018. These need not be paid back. They are grants.

Hambantota Port is regarded by India as an important link in the “string of pearls” and is often used to hype up the “China threat theory.”

In addition to that, CM Port has invested an additional $600 million in Hambantota Port for its operations.

If you add up all the payments that China has made, you will notice that it exceeds Sri Lanka’s debt to China for building the port.

But the West continues to propagate that Sri Lanka’s problem is China’s Debt Trap!

For more about China waived debt for 17 African countries to argue against western bullying

“Ephraim compasseth me about with lies, and the house of Israel with deceit; but Judah yet ruleth with God, and is faithful with the saints” Hosea 11:12

“Ephraim shall be desolate in the day of rebuke; among the tribes of Israel have I made known that which shall surely be” Hosea 5:9

~ by Joel Huan on July 16, 2022.

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