Sri Lanka owes 15 percent of external public debt to China
ECONOMYNEXT – Sri Lanka owes about 15 percent of its external public debt to China when the central government and state enterprises loans are added together, an International Monetary Fund report said.
Central government debt owned to China was 9.1 percent by end June 2019. But China had funded a number of state owned enterprises directly with Treasury guarantees in some cases.
Some other agencies directly fund the government who on-lend to state or private enterprises in case of SME credit.
About 12.7 percent of central government external debt was owned to the Asian Development Bank, Japan 10 percent and World Bank 9.5 percent.
The ADB, World Bank and Japan had been funding Sri Lanka for decades with long term loans, usually after careful feasibility studies.
Both the ADB and Japan had funded the Sri Lanka Ports Authority and also helped bring in private investment, boosting Colombo Ports profitability.
China’s loans however were all accumulated in a little over a decade, as it suddenly became large lender to tied projects done without competitive tender.
However China has also funded a 900Mega Watt coal plant is Sri Lanka which is believed to be one of the highest return investments made in Sri Lanka since the Mahaweli hydro power projects though there environmental concerns as the cleanest technology available was not used.
By end 2018, the IMF estimated Sri Lanka’s public debt to be 13.0 billion rupees or 90 percent of GDP made up of 83.3 percent of central government debt, 5.2 percent of guarantees and 1.6 percent of GDP central bank debt owed to the Fund. (Colombo/Nov05/2019)