Sri Lanka’s Prime Minister, Dinesh Gunawardena, revealed on Wednesday that China has pledged to spearhead the development of critical infrastructure projects in the island nation.
Following discussions with his Chinese counterpart in Beijing, Prime Minister Gunawardena disclosed China’s commitment to support Sri Lanka in restructuring its external debt, a crucial step in securing a $2.9 billion IMF bailout package.
While details of Beijing’s stance on debt restructuring remain undisclosed, Sri Lankan officials have indicated that China is inclined to extend loan tenures and adjust interest rates, albeit hesitantly.
Facing a foreign exchange crisis in 2022, Sri Lanka defaulted on its $46 billion foreign debt, leading to widespread protests and the resignation of then-President Gotabaya Rajapaksa.
Prime Minister Gunawardena’s office affirmed that Premier Li Qiang assured continuous assistance in Sri Lanka’s debt restructuring efforts and pledged support for the nation’s economic development.
Notably, China offered assistance for the expansion of Colombo International Airport and the development of Hambantota port, key strategic assets for Sri Lanka’s economic growth.
The announcement comes amid tensions surrounding Chinese involvement in strategic projects in Sri Lanka, particularly the Hambantota port, leased to a Chinese state-owned entity for 99 years in 2017.
This move raised concerns in neighboring India and the United States about potential military implications, given China’s growing influence in the Indian Ocean region.
