Sri Lanka President, Gotabaya Rajapaksa, has reportedly agreed to a billion-dollar loan from China despite owing 4.8 billion dollars this year.
Rajapaksa has borrowed from China twice in the past two months in pursuit of a bailout as the country’s foreign reserve shrank to $7.2 billion in April. He has stated one of his key objectives is to attract foreign investment into the country.
In response to the outbreak of the coronavirus, China lent $500 million to Sri Lanka in terms of an urgent loan in April. This was followed by a further decision last week to borrow $80 million from the China Development Bank to improve roads and infrastructure.
The decision to further borrow from China for the development of roads has been criticised by former Sri Lanka’s Minister for Economic Reform, Harsha de Silva, who maintained that such projects should not be prioritised now.
At the end of 2019, Sri Lanka’s debt stood at 13 trillion rupees, 6.4 trillion of which was foreign debt.
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