Sri Lanka is indeed trapped, but not by Chinese debt – Embassy
Posted on July 6th, 2018
Courtesy Adaderana
The spokesperson said that Chinese loans are not the main part of Sri Lanka’s foreign debt. According to the Annual Report 2017 of the Central Bank of Sri Lanka, the total external debt of the Island country counts US dollars 51.824 billion, among which outstanding Chinese loans takes up only about 10.6% with the amount of USD 5.5 billion.
Besides, 61.5% the Chinese loans (USD 3.38 billion) are concessional ones with a much lower interest rate than the international market. The commercial loans from China are also negotiated at an appropriate rate by the two sides according to then international market.”
The Chinese Embassy in Sri Lanka says that some foreign forces without willingness or abilities to help, are fabricating lies to obstruct the joint development of China and other developing countries including Sri Lanka and keep Sri Lanka in the trap of poverty.
Mr. Luo Chong, Spokesperson and the Chief of Political Section of Chinese Embassy, made remarks on the so-called Debt Trap” allegations and some other related issues during an media briefing at the Chinese Embassy on Thursday.
During the Q&A session, Mr Chong stressed that Sri Lanka is indeed trapped, not by Chinese debt but by the lack of development due to historical and external reasons.
What China has been doing is to provide all kinds of support including financial assistance to help Sri Lanka pulling out of the trap, while some foreign forces without willingness or abilities to help, are fabricating lies only trying to obstruct the joint development of China and other developing countries including Sri Lanka and keep Sri Lanka in the trap of poverty.”
The spokesperson said that Chinese loans are not the main part of Sri Lanka’s foreign debt. According to the Annual Report 2017 of the Central Bank of Sri Lanka, the total external debt of the Island country counts US dollars 51.824 billion, among which outstanding Chinese loans takes up only about 10.6% with the amount of USD 5.5 billion.
Besides, 61.5% the Chinese loans (USD 3.38 billion) are concessional ones with a much lower interest rate than the international market. The commercial loans from China are also negotiated at an appropriate rate by the two sides according to then international market.”
He said the so-called Debt Trap” is a false proposition created by the Western media, with a direct attempt to obstruct the joint development of China and other developing countries including Sri Lanka, while the fundamental purpose is to maintain the Western world’s traditional” superior position in the international and regional politics and economics.
China will continue to provide selfless support including much-needed funds for the development of Sri Lanka, and would like to work together with Sri Lankan governments, business community, media and the general public to eliminate interference, strengthen confidence, and jointly promote the pragmatic cooperation for the benefit of the two countries and the two peoples.”
Ms. An Xin, Deputy Managing Director of Representative Office of China Habour Engineering Company Ltd and Mr. Tissa Wickramasinhe, COO of Hambantota International Port Group Ltd (HIPG) were also present for the briefing.
July 6th, 2018 at 6:36 am
Exactly!
These are only central bank figures. Real loan numbers are higher which means the percentage of Chinese loans are even smaller.
Sri Lanka is in a debt trap but not due to Chinese loans.
July 6th, 2018 at 7:38 am
Yes, it may be true that most Chinese loans are on concessionary terms as explained above. But the point is whether the work done with those loans are actually worth the amount. Also, going by the current trends even the big private sector jobs in the country are being given mostly to Chinese companies. Are there no competent local contractors or contractors from other counties capable of doing same at a lessor cost.
As a rip off of our loans by Chinese I will give one example. The contract management of extension to Southern Expressway from Matara to Hambanthota (a length about 75km) was given to a Chinese company at US$90.0 million. I think most of supervision is being done by Srl Lankans on sub-consultancy basis. This was arranged by the previous government and this government just went ahead with it. One third of that amount would have been sufficient for the job. I think the officials and consultants who recommended the bid should answer for this fraud. Nowhere in the world such high amounts are spent for contract management (including supervision) mostly on flat terrain. Perhaps the reason why we could not get an expressway with standard lane width of 3.65meters and wide enough shoulders for a vehicle to park safely is due to excessive cost of construction. This may be one of the reasons why there are so many accidents on Southern expressway. When a heavy vehicle or a truck is parked on the shoulder which is only a meter wide most part of it is on the outer lane where the vehicles are moving fast. Especially if the visibility is poor due to rain or mist in the morning this is very dangerous.
The section where the two Australian tourist died recently due to a collision with a parked vehicle may not be in the section done by Chinese. But the fact that these accidents are happening because the previous government tried to cut corners due to high costs charged by these foreign contractors should be investigated and remedial action taken immediately.