The saga on future Chinese ownership of the Hambantota Port and the surrounding area took another turn today, when Finance Minister Ravi Karunanayake said that no land would be given to China, and that the proceeds from the transfer of Hambantota Port would be used as the government sees fit.

In response to a question from a journalist, Karunanayake said that he has no idea about a deal to provide China with 15,000 acres of land near the Hambantota Port for an industrial zone, and that no other part of the government is working behind his back to such end either.
I have no idea about such a thing. We are in a unity government, so there is nothing being done without all of us knowing,” he said.

Video by Sanjeewa

However, Karunanayake this October was quoted in international media reports as saying that the Sri Lankan government was in the final phases of talks to go ahead with the 15,000 acre industrial zone and that the agreement would be signed as soon as possible.

The proposal to provide 15,000 acres of land to China was initially publicized by Development Strategies and International Trade Minister Malik Samarawickrama this July. Karunanayake requested that any inquiries about a deal to sell land to China be directed to Samarawickrama.
Locals living in the area earmarked for the industrial zone have been carrying out protests this week against selling land to China. When inquired of this situation, Karunanayake said that one of the opposition parties, the Janatha Vimukthi Peramuna (JVP) must be creating issues.
The Janatha Vimukthi Peramuna must be saying that (sale of land to China),” he said.

The current Sri Lankan government has recently pivoted to economic and foreign policies that seem to be increasingly featuring China—a strategy favoured by the former government—from initial Western oriented policies.

The Chinese Ambassador in Sri Lanka had recently said that China is willing to extend support and investments exceeding US$ 5 billion if the Sri Lankan government was willing to provide the 15,000 acres of land in Hambantota, as well as land in other provinces for industrial zones as well.

Meanwhile, Karunanayake said that the funds collected from the transfer of 80 percent of shares to China for 99 years would not be used entirely to retire Chinese debt.

Prime Minister Ranil Wickremesinghe until now had been continuously saying that the transfer, valued at over US$ 1 billion is not a sale, but a debt-to-equity swap to retire some of the US$ 8 billion loans taken from China in the past.

Central Bank Governor Dr. Indrajit Coomaraswamy had noted that the deal is not a debt-to-equity swap, but a sale.

MirrorBusiness inquired from Karunanayake why the government was receiving cash, instead of China wiping the transacted amount as debt from the books as is common in debt-to-equity arrangements, for which he replied saying that only the loans with interest rates as high as 8 percent will be written off.

We pay what is unwanted, ensure we get a gain from that, then ensure the surplus funds, instead of paying off 2 percent, we hold on. There are concessional loans as well. We make the maximum use of it,” he said.

He noted that Sri Lanka currently has around US$ 760 million in high interest rate loans from many countries.

After we have paid back the loans, the money that comes into the consolidated fund can be used as we see fit,” Karunanayake said, and later added, all the high interest rates will be paid off immediately, and the balance will be used for reserves and protective elements we intend to do in the future,” he said. (Chandeepa Wettasinghe)