INSUBCONTINENT EXCLUSIVE:
With China yet to support Sri Lanka debt restructuring based on the financial obligation sustainability analysis (DSA) of the IMF and Paris
Club, time is abandoning Colombo to protect a much-needed loan to revive the nation from today recession
Sri Lanka is looking for a USD 2.9 billion-dollar loan from the IMF over 4 years in 8 installments.While India has accepted support the
Island country on the basis of DSA, China still has differences over duration of loan moratorium and financial obligation restructuring with
the IMFs Executive Board scheduled to fulfill next month
Under the circumstances, the IMF can either provide loan on arrears and then wait on China to come on board by IMF spring meeting or later
Sri Lanka owes almost USD 7.8 billion dollars to China that includes both bilateral financing from EXIM bank and business financing from
Throughout the years, the Rajapaksas with present President Ranil Wickremesinghe in cahoots, used these loans for sponsoring white elephant
projects like Hambantota port, Mattala airport, Norocholai power plant and Colombo port city as a result of which Beijing was offered long
term tax concessions and a totally free run of the Island nation.While China was the favourite destination of the Sri Lankan political
leadership considering that today millennium, Colombo picked to stay away from India under pressure from Beijing and has still not stated
yes to the Indian proposition to develop the Trincomalee port
It is another matter that India offered some 4 billion dollars worth of aid including food, fuel and medication, to Sri Lanka in 2015 to
tide over its raging economic crisis.With Chinese EXIM bank only ready to extend a 2 year debt moratorium to Colombo currently, the Sri
Lankan economy will hit the rock bottom quickly or else IMF will have to offer loan on defaults with additional rigid conditions
This not just means additional political instability in the Island country and the apparent recipient of this ferment will be the Communist
parties of Sri Lanka like the JVP.The political climate of Sri Lanka will stay unsure however the very first indicator of the degree of
ferment will be the local elections next month
Unless the mainstream celebrations are able to recover from the hit, President Wickremesinghe, who is the lone MP from his party, might not
aspire to reveal the general elections
With USD at an all-time high against Sri Lankan rupee and food inflation into double digits, things will get much worse for Sri Lanka prior
to they turn for the much better
And this could take at least a decade.Source - Hindustan Times .
- Agencies
