Sri Lanka, a victim of China’s debt trap still does not seem to learn its lesson. The country had already faced a mammoth challenge in the form of domestic and foreign debt of US $60 billion because of the debt trap by China. With no principles and morality, Sri Lanka again signed a loan agreement with China, worth 2 billion Renminbi on Tuesday.
The Chinese embassy said, “Sri Lanka has signed a loan agreement with China worth 2 billion Renminbi (USD 308 million) to support its COVID-19 response, economic revival and financial stability.”
It also tweeted, “China Development Bank and Sri Lankan Government have agreed RMB 2 Billion (approx LKR 61.5 Billion) Term Facility today (17 Aug), upon a request from Sri Lanka side to support its #COVID19 response, economic revival, financial stability and livelihood betterment.”
China Development Bank and Sri Lankan Government has entered into an agreement of RMB 2 Billion (approx LKR 61.5 Billion) Term Facility today (17 Aug), upon a request from 🇱🇰 side to support its #COVID19 response, economic revival, financial stability and livelihood betterment. pic.twitter.com/ehkvWGfXzz
— Chinese Embassy in Sri Lanka (@ChinaEmbSL) August 17, 2021
The recent loan is part of a USD 1.2 billion budget support in credit, which was confirmed earlier. Sri Lanka has received monetary support in two tranches of USD 500 million each in April 2021 and March 2020 respectively.
However, Sri Lanka is aware of the fact that Chinese financial assistance can turn out to be detrimental to national interests. Earlier reported by TFI, The Hambantota port case narrates the grim tale of how Chinese financial aid can bring in a huge debt crisis. During Mahinda Rajapaksa’s tenure as President, Sri Lanka had requested funding of the Hambantota port. China was the only country to reach out to them with a US $ 307 million loan to the island country at an exorbitant interest rate of 6.3 per cent.
With the port turning out to be a failure, the Sri Lankan government ended up in a huge debt crisis. To get rid of the burden of mounting dues, the Sri Lankan government handed over 70 per cent ownership of the port through a 99-year lease to the China Merchants Group, which is a state-owned Chinese company.
However, it is not only Sri Lanka that has been debt trapped by China. Several other countries including Nepal, Maldives and Africa have been the victims of China’s debt trap. In 2017, Nepal joined China’s Belt and Road Initiative (BRI) which was estimated to be $1 trillion. While China claimed that the initiative is a big opportunity for the regional players to revitalize their economies, the fact remained that it extended loans at commercial rates. The island nation of Maldives was also burdened with a whopping $3.4 billion debt to China who later rectified its dues.
It was China’s debt-trap diplomacy in Sri Lanka that had led to the souring of ties between India and its maritime neighbour. However, Mahinda Rajapaksa as President of the Country had looked up to India to pull his country out of debt troubles.
It is quite evident that Sri Lanka lacks principles and morality, and thus has handed over its worth to China with this step to fall into the same Chinese debt trap as prior.
Well looks like Sri Lanka and almost all neighbors of India seems to enjoy Loan mafia, debt trapping plans of China and it’s their internal matter and also all of the neighbors don’t appreciate India’s friendly helping gestures. Let them enjoy as long as they don’t let their land be used by China to launch any attacks on India.