Effect of Chinese debt on Sri Lanka on Indian Ocean: Sri Lanka to contract additional loan of 16,000 crore to China

Strong points:

Sri Lanka will take a new loan of 2.2 billion dollars from China, India will expand in the Indian Ocean; Prime Minister Mahinda Rajapaksa considered close to China, captured Hambantota port
Sri Lanka has again requested a new loan of $ 2.2 billion (Rs.161912080000) from China to save the country’s deteriorating economy. Sri Lankan Money and Capital Markets Minister Nivard Kabral said within the next two weeks the Sri Lankan government will also finalize a $ 1.5 billion money swap deal with the Central Bank of China. Sri Lanka already has billions of dollars in debt with Sri Lanka. As a result, it must cede its port of Hambantota to China on a 99-year lease.

Sri Lanka to meet foreign exchange needs with debt
According to an Asia Times report, the Sri Lankan government claims that China’s debt will be used as a buffer to meet foreign exchange needs. Sri Lanka’s foreign exchange reserves fell by $ 4.8 billion at the end of January, according to official Sri Lankan figures. Earlier in 2009, Sri Lanka’s foreign exchange reserves had reached $ 4.2 billion.

Sri Lanka talks to many banks in China for loans
Sri Lankan officials say their government is also negotiating a $ 700 million loan with the China Development Bank. Of this amount, 200 million dollars will be received in the form of yuan in Chinese currency. Between 2005 and 201515, Mahinda Rajapaksa borrowed billions of dollars from China during his presidential term. He is currently the Prime Minister, while his brother is the President. In such a situation, we see him again going to China to get into debt.

India and America are also worried about Sri Lankan debt
Many Western countries, including India, are troubled to see Sri Lanka become entangled in the Chinese debt trap. In fact, these countries fear that China will occupy all of Sri Lanka instead of going into debt. In such a situation, China will have great strength in the Indian Ocean. In 2017, Sri Lanka ceded the port of Hambantota to the Chinese company in exchange for a loan of $ 1.4 billion. After that, when India opposed it, Sri Lanka stopped using this port for military service.

Sri Lanka’s total debt of $ 55 billion
Sri Lanka has a total debt of $ 55 billion with countries around the world. According to the report, this amount represents 80% of Sri Lanka’s total GDP. Of these, China and the Asian Development Bank have the highest debt. While it is followed by Japan and the World Bank. India provided a loan of 2% of Sri Lanka’s GDP.

India China Tension: China trapped in debt trap to neighboring countries, India gives appropriate response to dragon in all countries
China helps Sri Lanka with donation diplomacy
Sri Lanka received another shipment of Chinese-made face masks and medical supplies to fight the corona virus in mid-June. Which proves that Sri Lanka is an important part of Beijing’s foreign policy and donation diplomacy. After sidelining Sri Lanka with its financial debt, China itself is spreading the virus and is now dealing with it.

After Nepal, Bangladesh, now Sri Lanka… China surrounds India with the diplomacy of donations
Sri Lanka is the center of China’s expansion in the Indian Ocean
China has also included Sri Lanka in China’s Indo-Pacific Belt and Road Expansion Initiative (BRI). Sri Lanka leased the Port of Hambantota to the Merchant Port Holdings Limited Company of China for 99 years in 2017 for $ 1.12 billion due to the non-payment of Chinese debt. However, Sri Lanka now wants to reclaim this port.

Now Sri Lanka has played the card of China, this demand from India
Sri Lanka cut ties with America
Prior to 2017, there were strong ties between Sri Lanka and the United States. Meanwhile, the pro-US Sirisena-Wickremesinghe administration has extended the Acquisition and Cross-Service Agreement (ACSA) with the United States for the next 10 years. This allowed the United States to have logistics supplies, refuel, and shut down operations in the Indian Ocean region. But now the Gotabaya administration has reduced its relations with the United States.

China’s great strategic victory in Sri Lanka, America pulls out of the big deal, know what the effect will be
Proximity to China increased during Mahinda Rajapaksa’s tenure
During Mahinda Rajapaksa’s tenure, there was a lot of closeness between Sri Lanka and China. Sri Lanka has contracted a lot of debt with China in the name of development. However, when it was his turn to repay, Sri Lanka had nothing left. After that, the Port of Hambantota and 15,000 acres of land had to be ceded to China for an industrial zone. It is now feared that China is also using it as a naval base to continue its activities in the Indian Ocean.

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