EconomyGlobal/ChinaPolitical Economy

Debt Distress- Lessons to learn from Chinese debts trap in Sri Lanka:

Hurry makes worry

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January 19, Kathmandu-

The president of crisis-hit Sri Lanka has asked China to restructure its debt repayments as part of efforts to help the South Asian country navigate its worsening financial situation. Gotabaya Rajapaksa made the request during a meeting with Chinese foreign minister Wang Yi on Sunday.

In the last decade China has lent Sri Lanka over $5bn (£3.7bn) for projects including roads, an airport and ports.But critics say the money was used for unnecessary schemes with low returns.

“The president pointed out that it would be a great relief to the country if attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the Covid-19 pandemic,” Mr Rajapaksa’s office said.

Last weeks, Wijeyadasa Rajapakshe, a member of Parliament in the ruling party, wrote a six-page letter addressed to Chinese President Xi Jinping accusing Beijing of pushing Sri Lanka into a “debt trap” to expand China’s sphere of political influence.

Rajapakshe wrote, “It is manifestly visible that your friendship with us is no more genuine and candid, instead you use our relations to achieve your ambition of becoming the world power at the stake of lives of our innocent people.”

Last year, Myanmar acted wise in cutting down the amount of debt, and thereby the sphere of influence of China- a move credited to expert American design.

The ominous Belt and Road Initiative (BRI) strategy of China to flext its muscle around the world has already casued casualties on many African and East European nations. These nations are badly trapped in the Chinese debt, and there is no telling how they will ever repay.

Nepal needs to lean lessons fro the plight of the debt-engulfed nations, and instead of playing ultra-jingoist rhetoric, should accept grants rather than seeking loans. MCC seems a good option in tis regards.

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