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China support project to prove management mistakes in Sri Lanka

China is Sri Lanka’s largest bilateral lender, owning at least 10% of its $ 51 billion external debt.

Hambantota, Sri Lanka:

Airplane-free airports, mealless revolving restaurants, debt-rich ports-The economic crisis in Sri Lanka was exacerbated by a Chinese-funded project that stands as an ignored monument to government luxury.

South Asian island nations have borrowed heavily to fill their long-standing budget shortages and trade deficits, but have also wasted huge amounts on unthinking infrastructure projects that are wasting more money.

Since its independence from the United Kingdom in 1948, it has been on the verge of the worst financial crisis, suffering 22 million people from months of power outages and severe food and fuel shortages.

After a few weeks of mostly peaceful protests that the government demands to resign from financial mismanagement, pro-government supporters clash with demonstrators, killing five and injuring at least 225. , The situation became fierce.

Many of the white elephant projects that helped fuel the crisis are collecting dust in the Hanbatota district, home of the powerful Rajapaksa clan. ..

Prime Minister Gotabaya Rajapaksa, who commissioned many projects, announced his resignation on Monday, the same day that anti-government movements intensified.

But his younger brother Gotabaya remains president.

The centerpiece of the infrastructure drive is a deep port on the world’s busiest east-west route, which was intended to promote industrial activity.

Instead, it bleeds money from the moment it begins to operate.

“When the project was announced, we were very much looking forward to it, and the area has improved,” Dinuka, a longtime resident of Hambantota, told AFP.

“But now it doesn’t mean anything. The harbor isn’t ours and we’re having a hard time living.”

The port of Hanbatta lost $ 300 million in six years, unable to meet the $ 1.4 billion Chinese loan raised to raise construction funds.

In 2017, a Chinese state-owned enterprise was handed a 99-year debt to the port. This is a deal that has raised concerns throughout the region that Beijing has gained a strategic foothold in the Indian Ocean.

Overlooking the harbor is another luxury backed by China. The $ 15.5 million conference center has been rarely used since its opening.

Nearby is Rajapaksa Airport, which was built with a $ 200 million loan from China. The airport wasn’t used so much that at some point it couldn’t afford the electricity bill.

The capital, Colombo, has a China-funded Port City project. This is a 665 acre artificial island founded with the goal of becoming a financial hub comparable to Dubai.

However, critics have already commented that the project will be a “hidden debt trap.”

Largest bilateral lender

China is the government’s largest bilateral lender, owning at least 10 percent of its $ 51 billion external debt.

However, analysts believe that the actual numbers will increase significantly when taking into account the loans to state-owned enterprises and central banks in Sri Lanka.

Borrowing contributed to Sri Lanka’s disastrous financial hardship after years of financing to make up for the surge in budget shortages and to fund the imported products needed to sustain the island’s economy. bottom.

“Decades of good financial conditions and weak governance have plagued us,” Murtaza Jafar, chairman of the Sri Lanka Advokata Institute think tank, told AFP.

The economic woes were exacerbated after the coronavirus pandemic robbed tourism and remittances of significant income and made import-dependent countries unable to purchase essentials from abroad.

“China did its best”

Last month, the Sri Lankan government announced a default on foreign lending obligations as it was unable to keep up with the growing debt burden and the credit rating downgrades depleted sources of new lending in the international financial markets.

While seeking to renegotiate its repayment schedule with China, Beijing instead offered more bilateral loans to repay its existing debt.

The proposal was terminated by Sri Lanka’s appeal for support for the International Monetary Fund. This aroused astonishment as Chinese lenders are likely to need to do a loan haircut.

“China has done its best to prevent Sri Lanka from defaulting, but sadly they decided to go to the IMF and default,” Chinese ambassador Chi Jen Hong told reporters last month.

For many Sri Lankans, rarely used infrastructure projects have become a powerful symbol of the mismanagement of the Rajapaksa clan.

Krishansa Kratunga, owner of a small stationery store in Colombo, said:

Kratunga’s business is located near the entrance to the Lotus Tower, a flower-shaped skyscraper funded by China.

The tower’s colorful glass facade dominates the capital’s skyline, but its interior (and the planned revolving restaurant with panoramic views of the city) has never been exposed.

“If we are begging for food, what is the point of being proud of this tower?” Asked Kratunga.

(This story has not been edited by NDTV staff and is automatically generated from the syndicated feed.)

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