December 22, Colombo (LNW): President Anura Kumara Dissanayake has announced plans to visit China in mid-January for crucial discussions, marking an important step in the island nation’s diplomatic and economic efforts.
This announcement comes shortly after the completion of a long-awaited restructuring of Sri Lanka’s foreign debt, a major milestone in the country’s path to recovery.
At the time of Sri Lanka’s economic collapse in 2022, China was the largest creditor among the country’s bilateral lenders, holding more than half of the nation’s external debt.
This situation was particularly dire when Sri Lanka ran out of foreign exchange, leaving it unable to afford essential imports such as food, fuel, and medicines.
In the wake of this crisis, Sri Lanka has embarked on a slow but steady economic recovery, largely thanks to the assistance of the International Monetary Fund (IMF), which provided a bailout package.
The government has also implemented austerity measures in an attempt to restore its severely strained finances.
Dissanayake, who took office in September 2024, has made tackling corruption and improving governance central to his leadership agenda.
His party’s overwhelming victory in snap parliamentary elections has further strengthened his position domestically.
While details of his upcoming visit to China remain sparse, Dissanayake confirmed his travel plans, stating that he would be heading to Beijing sometime next month.
His trip is expected to focus on strengthening ties with China, which has been a key economic partner for Sri Lanka for many years.
This will not be the President’s first foray into international diplomacy, however. His first official overseas visit as president was to India, where he was warmly welcomed by Prime Minister Narendra Modi on December 16.
India, as a regional powerhouse, has historically held significant influence in Sri Lanka, and the two countries share deep cultural, economic, and security ties.
Nevertheless, India is also engaged in a fierce competition with China for geopolitical influence, particularly in the Indian Ocean region.
The island of Sri Lanka, strategically positioned along one of the world’s busiest maritime trade routes connecting the Middle East and East Asia, has become a focal point in this rivalry.
India has expressed growing concerns over China’s increasing influence in Sri Lanka, especially through projects under China’s Belt and Road Initiative (BRI), which New Delhi views with suspicion.
Given Sri Lanka’s critical location in the Indian Ocean, any shift in alliances between Sri Lanka and China could have wider implications for regional security and economic dynamics.
In the midst of these complex geopolitical considerations, there is some optimism about Sri Lanka’s future. On Friday, credit rating agency Fitch upgraded Sri Lanka’s long-term foreign currency issuer default rating to CCC+, reflecting a positive outlook following the debt restructuring efforts.
However, Fitch also cautioned that while these measures have alleviated some of the immediate financial pressures on the government, Sri Lanka’s debt-to-GDP ratio and interest-to-revenue ratios remain high, posing long-term challenges for the economy.