The Sri Lankan government is set to receive a fresh loan from China, ignoring all dangers of the debt trap policy by the Xi Jinping regime. The latest requirement of the Island nation has aroused to avoid defaulting on foreign debts. The government of President Gotabaya Rajapaksa desperately needs more than $15 billion in cash owed to international creditors to service its debt. Earlier this year, China eased some of the pressure by injecting $500 million as part of a China Development Bank syndicated loan of $1.2 billion.
Additional $ 700 million from China
As the deadline for the next tranche of repayment nears, Sri Lanka is all set to knock on Chinese doors rather than International Monetary Fund (IMF). "We have been in touch with the China Development Bank," quoted Nikkei Asia quoted Nivard Cabraal, minister of money and capital market and state enterprise reforms as saying. He further added, "We are now negotiating the additional $700 million."
The Minister's statement regarding a bailout from IMF reflected the lack of trust for D.C. based agency. Cabraal said, "If we have to go and hold the IMF's hand -- or if the IMF has to hold our hand -- that, I think, is a danger signal. We know we have to get our debt situation under control. Do we need the IMF to say that? No."
IMF: An imperial and colonial conspiracy?
The preference of Sri Lanka for China is attributed to the complicated history of the country with the multilateral lender in Washington D.C. In 55 years, Colombo has needed IMF bailouts 16 times. Notably, only Pakistan is worst placed than Sri Lanka when it comes to seeking bailouts from IMF which stands at 20 times.
Out of these 16 attempts, 9 were approved by the IMF. It was in 2016 that Sri Lanka approached IMF for a bailout that was abruptly ended with the November election producing new administration the same year. Experts are of the opinion that a part of the Sri Lankan power corridor sees IMF with suspicion, and going to it is presented as having a negative outcome. IMF is still considered as having "imperial and colonial" trappings.