India’s neighboring country Sri Lanka is in very bad condition. There is a shortage of food and people facing financial crisis are taking to the streets to protest. Food inflation in Sri Lanka has reached 30 percent. In such a situation, it is also important to know how the mountain of crisis suddenly fell on Sri Lanka leading a beautiful, prosperous life.
Experts say that the main reason for Sri Lanka’s involvement in the crisis is its borrowing from China. Earlier, the Sri Lankan government invested heavily in borrowing at high interest rates, but did not yield returns. Now this debt is the main reason for Sri Lanka’s crisis. Sri Lanka is not the first country to be caught in the trick of China. India’s neighboring countries Pakistan, Myanmar, Maldives and Bangladesh as well as 165 countries of the world are already in debt.
The situation was the same in Sri Lanka as well. Sri Lanka’s GDP in 2021 was around $81 billion. China’s debt on Sri Lanka is about 8 8 billion. Apart from this, the total external debt on Sri Lanka is 45.45 billion. The list also includes Pakistan, Maldives, Myanmar, Laos, Papua New Guinea, Brunei and Cambodia.
According to the IMF and the World Bank, China alone accounts for 27.1 per cent of Pakistan’s total external debt. At the same time, China owes 17.77 percent to Sri Lanka, 20 percent to Maldives, 6.81 percent to Bangladesh and 3.39 percent of Nepal’s total external debt. The biggest problem facing Sri Lanka, which is going through a crisis, is that it is not getting any concession on debt from China.
China has not only left Sri Lanka alone in this crisis, but has also not given any concession to Sri Lanka in repaying the debt. In such a situation, expensive debt has become a big problem for Sri Lanka. According to Ed data, China has given loans to other countries at an average interest rate of 4.2 percent. Countries like Japan, Germany, France, OECD-ADC lend at 1.1 percent interest. Apart from this, China has also kept the loan period very short. China has given loans to most countries for a period of 10 years. On the other hand, countries like Japan, Germany, France, OECD-ADC provide loans for a period of 28 years.