COLOMBO: Sri Lanka’s Prime Minister, Dinesh Gunawardena, announced on Wednesday that China has committed to the development of the island nation’s strategic deep sea port and the capital’s airport following discussions with his counterpart in Beijing.
China, being Sri Lanka’s largest bilateral creditor, has pledged to “assist” in the restructuring of Sri Lanka’s external debt, a crucial step for the country to uphold its $2.9 billion IMF bailout program.
Although Beijing’s stance on debt restructuring remains undisclosed, Sri Lankan officials have indicated that China may extend the tenure of loans and adjust interest rates instead of taking a haircut on its loans.
Facing a shortage of foreign exchange to finance essential imports, Sri Lanka declared a sovereign default on its $46 billion foreign debt in 2022, leading to months of protests and the resignation of then-president Gotabaya Rajapaksa.
During the discussions, Premier Li Qiang assured continuous assistance in Sri Lanka’s debt restructuring process and offered support for the country’s economic development endeavors, as per Gunawardena’s office.
China has also extended assistance for the development of Colombo International Airport and Hambantota port, although specific details were not disclosed.
The expansion project of Colombo airport, funded by Japan, had been halted due to Sri Lanka’s sovereign debt default.
Hambantota port, located on the island’s southern coast, was leased to a Chinese state-owned company in 2017 for 99 years, raising concerns in neighboring India about potential security implications.
Both India and the United States have expressed apprehensions over China’s presence at Hambantota, fearing it could bolster China’s naval dominance in the Indian Ocean region.
While Sri Lanka has assured that its ports will not be used for military purposes, India has raised objections to Chinese research vessels calling at Hambantota, citing espionage concerns.
