Floundering ‘Belt & Road Initiative’ makes China clear Lanka IMF bailout condition
By Our Special Correspondent
New Delhi, March 7: Decks seem now clear for the International Monetary Fund (IMF) to approve $2.9 billion package for Sri Lanka. Sri Lankan president Ranil Wickremesinghe on Tuesday announced in Sri Lankan Parliament that the island nation is on course to receive the financial relief later this month. The announcement appears to suggest that China has finally agreed to restructure its loan to Sri Lanka, which is the condition for the IMF package.
Sri Lanka had defaulted on the servicing of its foreign debt in April last year. While India, Japan and Western donors had agreed to restructure their outstanding loans with the island nation, China had been dragging its feet to provide the relief to Colombo.
The announcement of the Sri Lankan president has come at a time when China held its “Two Sessions” over the weekend amid intense international scrutiny. “The Belt and Road Initiative (BRI) of Chinese president Xi Jinping has had a mixed bag. While the BRI paid rich dividends to China in Europe such as the Greece Port, it has had negative consequences in South Asia and Africa. Several of the countries such as Sri Lanka, Pakistan and Bangladesh have begun rethinking their participations in the BRI projects,” said Shyam Sharan, India’s former foreign secretary, during a dialogue hosted by the India International Centre and the Press Club of India.
Sri Lanka has almost about $52 billion of foreign debt. China alone accounts for almost $15 billion of loan to Sri Lanka. Under the regime headed by Gotabaya Rajapaksa, China heavily lent to Sri Lanka for projects such as Hambantota Port which were of strategic interests for Beijing.
Incidentally, it was India which rushed immediate assistance to Sri Lanka after “Go Gotta Go” campaign hit the island nation amid popular uprising against the alleged corrupt means of China to bribe the ruling elite of Sri Lanka. India had provided close to $4 billion assistance to Sri Lanka. India also had taken initiatives to reach out to the IMF and the western donors to work out the financial relief measures for Sri Lanka.
With the announcement of the Sri Lankan president for the IMF package coming later this month, there may be new hope in Pakistan, which again is battling economic collapse, largely accounted for by the ever growing foreign debt. Pakistan also has close to $125 billion of foreign debt with substantial source of loan being China only. The China-Pakistan Economic Corridor (CPEC), which is part of the BRI, has turned out to be a money guzzler for Islamabad.
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