Sri Lankan Prime Minister says China will develop strategic infrastructure

Sri Lanka’s prime minister said on Wednesday that China had pledged to develop the island nation’s strategic deep-sea port and capital airport following talks with his counterpart in Beijing.

Prime Minister Dinesh Gunawardena said China, Sri Lanka’s largest bilateral creditor, would “assist” Sri Lanka in restructuring its foreign debt, a key condition for maintaining a $2.9 billion International Monetary Fund bailout.

Beijing’s stance on debt restructuring has not been made public, but Sri Lankan officials have said China is unwilling to cut loans but could extend loan terms and adjust interest rates.

In 2022, Sri Lanka ran out of foreign currency to finance imports of essential goods and declared a sovereign default on its $46 billion in external debt.

Months of protests forced then-President Gotabaya Rajapaksa to step down.

Gunawardena’s office stated that Prime Minister Li Qiang has promised that China will “continue to assist Sri Lanka in the debt restructuring process and help Sri Lanka develop its economy.”

Gunawardena said Beijing had provided “development assistance” to Colombo International Airport and Hambantota Port, the statement added, without providing further details. Japan-funded Colombo airport expansion has been on hold since Sri Lanka defaulted on its sovereign debt.

In 2017, the southern seaport of Hambantota was handed over to a Chinese state-owned company for $1.12 billion on a 99-year lease, sparking security concerns in Beijing’s regional rival India.

Both India and the United States are concerned that China’s foothold in Hambantota, on the island’s southern coast, could bolster its naval superiority in the Indian Ocean.

Sri Lanka insists its port will not be used for any military purposes, but New Delhi objects to Chinese research ships docking at Hambantota, fearing they could be used for espionage.

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By Ali Raza

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