Sri Lanka’s president, Anura Kumara Dissanayake, recently met with Chinese leader Xi Jinping. This was just a month after he traveled to India, marking his first overseas trip since he became president in September. Sri Lanka is facing a tough time, dealing with its worst economic crisis in decades. This crisis led to big changes in the government, allowing Dissanayake to take the role of president.
China has been a major lender to Sri Lanka, providing many loans and building projects over the years. Even though China is still the biggest lender, India’s assistance has become very important since Sri Lanka’s economy fell apart. India stepped in to help with food, fuel, and medicine when the country needed it most.
Sri Lanka is an island near India, and both India and China want to influence it. Dissanayake’s meeting in China is part of his effort to balance the interests of both countries. When he was in India, he promised Prime Minister Narendra Modi that he wouldn’t allow Sri Lanka to be used against India’s interests.
Sri Lanka declared bankruptcy in April 2022, unable to pay $83 billion in loans. The country faced severe shortages of food, medicine, and fuel, causing long power cuts. China plays a key role in helping Sri Lanka restructure its debts since about 10% of the loans come from China, which is more than what Japan and the Asian Development Bank provided.
Over the last 10 years, Sri Lanka borrowed heavily from China to build roads, an airport, and other infrastructure. Unfortunately, many of these projects did not make enough money, leading Sri Lanka to lease a major port to a Chinese state-owned company in 2017.
The economic crisis was mainly due to poor management and the impact of the COVID-19 pandemic, along with terrorist attacks in 2019 that hurt tourism. The pandemic also affected the money that Sri Lankans working abroad could send back home.
Leave a Reply