Sri Lanka crisis exposes China loan policy: 5 things to know
By Deepika S
Why are some people blaming China?
Many believe Sri Lanka's economic relations with China are the main driver behind the crisis. The US has called this phenomenon "debt-trap diplomacy".
How do Chinese loans compare with others?
IMF put Sri Lanka’s foreign debt at $38.6 billion, or 47.6% of the central government's total debt. The loans from China accounted for only about 10% of Sri Lanka's total foreign debt in 2020. While Japan accounted for 11%.
What is China's role in Sri Lanka's economic crisis?
Defaults over China's infrastructure-related loans to Sri Lanka, especially the financing of the Hambantota port, are being cited as factors contributing to the crisis.
When Sri Lanka needed to raise commercial loans, China came to the rescue. The China Development Bank offered a $1 billion syndicated loan that Colombo found more attractive than international banks.
How did China become Sri Lanka's go-to bank?
How has China responded to Sri Lanka's crisis?
China reiterated that it is doing its “utmost” to provide assistance to debt-ridden Sri Lanka, even as Beijing maintained a steady silence on Colombo’s request for debt rescheduling as well as extending the promised USD 2.5 billion assistance.