A delegation of the International Monetary Fund is in Sri Lanka to negotiate the rescue of the bankrupt country. According to ‘s Asia correspondent Kirsi Crowley, China should come in to help Sri Lanka get out of its debt spiral.
A delegation of the International Monetary Fund (IMF) is currently in Sri Lanka negotiating an aid package for the debt-ridden country.
The island nation located in South Asia has practically drifted into bankruptcy, as it is unable to pay its debt worth 29 billion euros.
Ylen’s Asian correspondent Kirsi Crowley describes the situation in Sri Lanka in Ylen Aamu as difficult. Crowley says from the country’s capital, Colombo, that rickshaw drivers, for example, cannot do their job properly because of gasoline rationing.
– We have run out of currency reserves here, the country is practically bankrupt. For example, you can’t get enough gasoline here, so there is rationing here and there are continuous queues in front of gas stations here, says Crowley.
According to Crowley, the price of food has tripled at the same time.
– One mother burst into tears when she said that they have to compromise on food. You can’t always eat three portions of food a day.
Crowley points out that Sri Lanka had already moved into middle-income among developing countries, but political decisions have led to the country’s bankruptcy.
– There is great tourism, tea production, and clothing production here, so there would be preparations for prosperity.
The creditor countries must meet
Sri Lanka has been protesting for months because of the country’s economic situation. President Gotabaya Rajapaksa fled the country in July after protesters stormed his official residence.
According to Crowley, the general mood now is for a president-in-waiting Ranil Wickremesinghe in terms of administration.
– There aren’t really any solutions to be found here. Someone has to do something now. At least we are satisfied that the new president is talking to the IMF, says Crowley.
According to Crowley, the fact that the IMF is able to offer help also means that the big creditor countries would also have to, for example, forgive some of these loans. This will be especially difficult for its biggest creditor, China, Crowley says.
– It would also mean that Sri Lanka would have to tighten its belt even more.
Wickremesinghe said last week that he would ask Sri Lanka’s second largest creditor, Japan, to invite creditor countries to discuss Sri Lanka’s debt arrangements. On Friday, three Japanese sources told Reuters that Japan would agree to host the meeting.
China is increasing its influence
Sri Lanka has been seen as drifting more and more dependent on its biggest creditor, China.
– The former president took out big loans for extravagant projects, says Crowley.
According to Crowley, for example, the port of Hambantota is practically under Chinese control. In addition, a “state-of-the-art” city is being built in Colombo’s waterfront district with Chinese money.
Crowley points out that there is also a security political aspect to Sri Lanka’s relations with China. Sri Lanka’s advantage is, among other things, an important freight route.
– Now we are talking about the tensions between the great powers – is China also increasing its influence in the sea areas close to Sri Lanka?
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