Monday, December 5, 2022

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Sri Lanka hopeful for more rescue loans from China 


China Continues to provide further aid for Sri Lanka to  sustain in the ongoing economic crisis and it has not taken any decision to back down  on previous pledges relating to financial aid. 

Prime Minister  Ranil Wickremesinghe indicated he would be willing to accept more financial help from China, despite his country’s mounting debt.


He noted that his government has been talking with China about restructuring its debts.Beijing had earlier offered to lend the country more money but balked at cutting the debt, possibly out of concern that other borrowers would demand the same relief.

Sri Lanka has received and continues to reach out to numerous countries for help including the most controversial, China, currently the country’s third-largest creditor.

The China International Development Cooperation Agency (CIDCA) has pledged an urgent emergency humanitarian aid of RMB 200 million to Sri Lanka, including 5000 tonnes of rice (with the previously announced 2000 tonnes), pharmaceuticals, production materials and other essentials.

 Furthermore, the Yunnan Province has announced a donation of RMB 1.5 million worth of food packages to Sri Lanka.

China has announced another 300 million RMB in aid to crisis-hit Sri Lanka. The Chinese Embassy in Colombo said that the aid will be provided for the purchase of urgently needed drugs, food, fuels, etc.

The latest aid increases the total emergency grant from China to 500 million RMB (approximately 76 million USD).The Chinese Embassy said the aid is being granted “to support Sri Lankan people at these trying times.”

By March 2022, China had provided Sri Lanka a total of US $ 2.8 billion as aid since 2020, including the US$ 1.5 billion currency swap in 2021.

In March, it was reported that the Sri Lankan Government requested a further US$ 1 billion loan and a US$ 1.5 billion credit line from China.

At the time it was said that the Sri Lanka Government was expecting to use the US $ 1 billion loan to settle the previous loans taken from the Chinese bank

Opposition figures have accused the president and the former prime minister of taking on a slew of Chinese loans for splashy infrastructure projects that have since failed to generate profit, instead adding to the country’s debt.

Critics have also pointed to a beleaguered port in the hometown of then-President Mahinda Rajapaksa, Hambantota, built along with a nearby airport as part of China’s Belt and Road Initiative projects, saying they cost too much and do too little for the economy.

The airport is running at a loss of Rs 10 million per day and the government is considering  operating it under Joint venture with foreign collaboration, official sources said.  

We need to identify what are the projects that we need for economic recovery and take loans for those projects, whether it be from China or from others, Wickremesinghe said.

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