According to calculations published by the China Africa Research Initiative, (CARI), Sri Lanka owed Chinese lenders $7.4 Billion – almost a fifth its public external debt by last year. This figure was higher than any other estimates.
This figure was higher than the “often-quoted 10-15 percent figures,” according to the study. It also indicated that a “significant” portion of China’s debt had been recorded under loans to state-owned businesses rather than central government.
Sri Lanka, which is currently in crisis, is restructuring its debt after years of economic mismanagement and the COVID-19 pandemic led to a country that plunged into the worst economic crisis in its history. The country was forced into default in 2008, the first time since independence from Britain in 1948.
According to data compiled by CARI at Johns Hopkins University School of Advanced International Studies, China Development Bank and Export-Import Bank of China, the largest Chinese lenders are China Development Bank (China Development Bank) and China Development Bank (EximBank), which account for $4.3 billion each.
China is Sri Lanka’s largest bilateral creditor. It is also part of official creditor negotiations to restructure its debt.According to the report, the island nation’s total debt externally is $37.6 million. The public external debt of the country rises to $40.6 million when you add in the central bank’s foreign currency swap with China. 22% of this is from Chinese creditors.
CARI’s total debt numbers are different from the $46.6 million tally published in September by the government. This is because it does not include local hard-currency loans and loans to certain state-owned entities.
CARI also identified six loans for deep water ports in Hambantota, EximBank, between 2007 and 2013, totaling approximately $1.3 billion.
These clauses stipulate that the loan agreements must be submitted to Chinese governing law and arbitrated before the China International Economic and Trade Arbitration Commission.