Do you want China as your loan shark?
By Jeff Kouba
Monday we took a look at the unfolding economic crisis in Sri Lanka. Yesterday then, some news that India heaved a life vest into the water, while China tied a concrete block to it…
Sri Lanka has extended a credit line with India by $200 million in order to procure emergency fuel stocks, the country’s power and energy minister said on Monday, as China said it supported efforts for the island nation to restructure its debt.
Colombo was also in talks with New Delhi over extending the credit line by an additional $500 million, minister Kanchana Wijesekera told a news conference, with four fuel shipments due to arrive in May.
Beijing’s ambassador Qi Zhenhong told Sri Lankan Finance Minister Ali Sabry at a meeting on Monday that China – one of the island’s largest bilateral lenders having extended about $6.5 billion in loans – supports its decision to work with the IMF to restructure its debt.
“Ambassador Zhenhong also assured Minister Ali Sabry that as a major shareholder of the IMF, China is willing to play an active role in encouraging the IMF to positively consider Sri Lanka’s position and to reach an agreement as soon as possible,” Sri Lanka’s finance ministry said in a statement.
In other words, China is saying “Sri Lanka, you’re already into us for six and a half large. Before we send more good money after bad, you can go to the IMF, but as for what you owe us, we’ll see if we can come to an “agreement.””
In return for China playing the role of angel investors, what sort of repayment might China look for from Sri Lanka?
On the southern tip of Sri Lanka, China helped finance and build the Hambantota Port project. The port opened in 2010. Often cited as an example of China’s “debt trap” approach to its victims, er, partners, China lent truckloads of money to Sri Lanka in the decade that followed, and in 2017, China Merchants Port was granted 70% of the port, as well as a 99 year lease.
The port is part of China’s so-called “string of pearls,” a chain of China-financed ports stretching from Africa to Gwadar to Sri Lanka and around SE Asia and up to Hong Kong.
In addition to that, China is building and financing the Colombo Port City in the capital city, on the west side of Sri Lanka. The project, on reclaimed land, is meant to be an international finance and economic center. It will be interesting to see if China pushes for outright ownership of one or both of these projects as Sri Lanka’s ability to pay its debt plunges.
On Tuesday, the Chinese Embassy in Sri Lanka tweeted this.
This came right after a series of tweets celebrating International Workers Day, but this was the subject of the tweets.
Message received.
May 3rd, 2022 at 6:40 am
Ha! Too late. The U.S. government, aided by traitors in congress and the senate, as well as a majority of the corporations, are already compromised.
May 3rd, 2022 at 7:59 am
Sri Lanka put all its eggs in the China basket and they are literally left with no food and water today.
May 3rd, 2022 at 11:25 am
I dunno. This reminds me of that saw about owing the bank $10000 vs $10000000. In the first case, you have a problem, in the second, the bank has a problem.
Why can’t Sri Lanka default? Shit, certain Latin American countries do this on a decadal basis. They always get new loans.
What’s China gonna do? Invade? C’mon.