Re: Sri Lanka - News and Discussion
Posted: 09 Apr 2016 04:55
The value of a nation having a lot of money is illustrated below. Not sure why the US is asleep at the wheel, though.
http://www.lankaweb.com/news/items/2016 ... debt-trap/
Sri Lanka Accepts Chinese Demands to Avoid Debt Trap
http://www.lankaweb.com/news/items/2016 ... debt-trap/
Sri Lanka Accepts Chinese Demands to Avoid Debt Trap
The decision to restart work on the project was announced Thursday during Sri Lankan Prime Minister Ranil Wickremasinghe’s visit to Beijing. The move opens the door for additional Chinese investments, and helps China forward its goal of getting access to the Indian Ocean.
The Sri Lankan leader signed several other deals during his trip for railway, road, port and airport projects that would be constructed by Chinese companies in his country.
....
....
Analysts said the Sri Lankan leader’s decision to resume work on the project is a desperate measure to stop his country from heading towards a debt trap. Sri Lanka is finding it extremely difficult to raise fresh funds from the world market after international ratings firms Fitch and Standard & Poor’s reduced the South Asian nation’s credit rating in February and March.
Sri Lanka wants China to reschedule past loans amounting to about $5 billion, and extend fresh loans. This includes Chinese finance for $1.6 billion to spend on a seaport and an airport in Hambantota, the home region of former Sri Lankan President Mahinda Rajapaksa, who was known to be close to China.
Financial problems and the need for infrastructure funding were the main reasons behind Wickremasinghe’s decision to restart the Colombo Port City project, according to Weerakoon Dushni, deputy director at the Institute of Public Policy in Colombo. “Managing loan repayments is a major problem. Nearly half of Sri Lanka’s external debt has been raised on non-concessional and commercial terms,” she said adding, “We need to engage with China both in political and economic terms.”
Some experts believe Sri Lanka has approached China for help because India and the United States failed to provide assistance. “The major task for Sri Lanka’s current government is economic development. Yet after its attempt to reduce its reliance on Beijing, Colombo has realized that there is no alternative,” Zhao Gancheng, director of South Asia Studies at the Shanghai Institute for International Studies told the Global Times newspaper. “Over the past year, neither India nor the U.S. has provided it with attractive mega-projects that China did. It is therefore natural for Sri Lanka to turn around and embrace China again,” Zhao said.