Sri Lanka’s chaos highlights dangers of Chinese debt for Africa

By David Whitehouse
Posted on Tuesday, 19 April 2022 10:38

Chinese Foreign Minister Wang Yi visits Sri Lanka
Chinese Foreign Minister Wang Yi arrives with Sri Lanka's President Gotabaya Rajapaksa and Sri Lanka's Sports Minister Namal Rajapaksa during his visit to Colombo Port city project, in Colombo, Sri Lanka, January 9, 2022. REUTERS/Dinuka Liyanawatte

Sri Lanka’s worst economic crisis since independence in 1948 highlights the dangers of Chinese debt diplomacy for Africa, analysts say.

The country this month suspended repayment of its foreign debt. The government of President Gotabaya Rajapaksa, which has faced widespread protests, was forced to introduce fuel rationing on 15 April. The country is seeking $2.5bn in financial support from China, including $1bn that would allow to repay existing Chinese debt due in July.

There’s little question that Sri Lanka’s debt to China is “a main driver of the lack of domestic and international confidence” in the ruling elite’s economic management, says Harry Broadman, managing director of the emerging markets practice at Berkeley Research Group LLC in the US. The pattern in Sri Lanka “will be repeated elsewhere,” he says.