China-backed projects testament to Sri Lanka's mismanagement

[Jackdaws]

sri lanka: China-backed projects testament to Sri Lanka's mismanagement - Times of India

South Asia News: An airport without planes, a revolving restaurant with no diners, a debt-laden seaport -- Sri Lanka's economic crisis has been exacerbated by Chinese-

timesofindia.indiatimes.com

An airport without planes, a revolving restaurant with no diners, a debt-laden seaport — Sri Lanka's economic crisis has been exacerbated by Chinese-funded projects that stand as neglected monuments to government extravagance.
The South Asian island nation borrowed heavily to plug years of budget shortfalls and trade deficits, but squandered huge sums on ill-considered infrastructure projects that have further drained public finances.

It is now in the grip of its worst financial crisis since independence from Britain in 1948, with months of blackouts and acute shortages of food and fuel plaguing its 22 million people.
After weeks of largely peaceful protests demanding the government resign over its economic mismanagement, things turned violent Monday after pro-government supporters clashed with demonstrators, leaving five people dead and at least 225 wounded.

Many of the white-elephant projects that helped fuel the crisis now gather dust in Hambantota district, home of the powerful Rajapaksa clan, which used its political clout and billions in Chinese loans in a failed effort to turn the rural outpost into a major economic hub.

The centrepiece of the infrastructure drive was a deep seaport on the world's busiest east-west shipping lane, which was meant to spur industrial activity.
Instead, it has haemorrhaged money from the moment it began operations.
"We were very hopeful when the projects were announced, and this area did get better," Dinuka, a long-time resident of Hambantota, told AFP.
"But now it means nothing. That port is not ours and we are struggling to live."
The Hambantota port was unable to service the $1.4 billion in Chinese loans rung up to finance its construction, losing $300 million in six years.

In 2017, a Chinese state-owned company was handed a 99-year lease for the seaport — a deal that sparked concerns across the region that Beijing had secured a strategic toehold in the Indian Ocean.
Overlooking the port is another Chinese-backed extravagance: a $15.5 million conference centre that has been largely unused since it opened.
Nearby is the Rajapaksa Airport, built with a $200 million loan from China, which is so sparingly used that at one point it was unable to cover its electricity bill.
In the capital Colombo, there is the Chinese-funded Port City project — an artificial 665-acre island set up with the aim of becoming a financial hub rivalling Dubai.


But critics have already sounded off on the project becoming a "hidden debt trap".
- Biggest bilateral lender - China is the government's biggest bilateral lender and owns at least 10 percent of its $51 billion external debt.
But analysts believe the true number is substantially higher if loans to state-owned firms and Sri Lanka's central bank are taken into account.
The borrowing contributed to Sri Lanka's dire fiscal predicament, after years of taking loans to cover spiralling budget deficits and to finance the imported products needed to keep the island's economy ticking over.

 

[Cheepek]

But analysts believe the true number is substantially higher if loans to state-owned firms and Sri Lanka's central bank are taken into account.

Just wait for IMF to get hold of the economy.

 

[xeuss]

Of course an article from the Times of India will blame China.

They just want to make sure that people of India don't see the similarities between Sinhala and Hindu chauvinism, economic mismanagement by the government, and the unbridled anti-Muslim hysteria.

 

[Jackdaws]

Of course an article from the Times of India will blame China.

They just want to make sure that people of India don't see the similarities between Sinhala and Hindu chauvinism, economic mismanagement by the government, and the unbridled anti-Muslim hysteria.

It's from AFP - a French news service

 

[Rollno21]

Of course an article from the Times of India will blame China.

They just want to make sure that people of India don't see the similarities between Sinhala and Hindu chauvinism, economic mismanagement by the government, and the unbridled anti-Muslim hysteria.

Your hate for hindus is blinding you. Get help it's killing you inside slowly.

 

[Sulman Badshah]

chinese loans accumulate less than 10% of total loans of Sri lanka

 

[dbc]

斯里兰卡的问题和中国没有多大关系，斯里兰卡是一个旅游国家，飞机场和港口是重要基础设施，斯里兰卡爆发经济危机是由于全球新冠病毒流行导致的。全球旅游业受到重创，斯里兰卡有很多俄罗斯的游客，受乌克兰战争影响，他们也不会去斯里兰卡了，全球粮食危机导致了全球经济危机，斯里兰卡一个小国家，他有什么办法解决？这和中国有什么关系，没有中国投资斯里兰卡就能解决其他困难？

No, the root cause is China does not challenge the host country on economic feasibility before it decides to fund a project. The money is often wasted on boondoggles like Hambantota, politically expedient but economically unviable.

 

[Nan Yang]

No, the root cause is China does not challenge the host country on economic feasibility before it decides to fund a project. The money is often wasted on boondoggles like Hambantota, politically expedient but economically unviable.

Quote
It was the Canadian International Development Agency—not China—that financed Canada’s leading engineering and construction firm, SNC-Lavalin, to carry out a feasibility study for the port. We obtained more than 1,000 pages of documents detailing this effort through a Freedom of Information Act request. The study, concluded in 2003, confirmed that building the port at Hambantota was feasible, and supporting documents show that the Canadians’ greatest fear was losing the project to European competitors.
End Quote

 

[Jackdaws]

It's simple. Newly installed Govts should just nationalize Chinese funded projects just like the Egyptians nationalized the Suez Canal to silence the Brits and the French. China should be free to take the case to ICJ or any other arbitration forum - their loan shark ways will get the Chinese cases thrown out.

 

[damiendehorn2]

It's simple. Newly installed Govts should just nationalize Chinese funded projects just like the Egyptians nationalized the Suez Canal to silence the Brits and the French. China should be free to take the case to ICJ or any other arbitration forum - their loan shark ways will get the Chinese cases thrown out.

And remember what Britain and France did to Egypt for doing that.

 

[Wood]

But analysts believe the true number is substantially higher if loans to state-owned firms and Sri Lanka's central bank are taken into account.
The borrowing contributed to Sri Lanka's dire fiscal predicament, after years of taking loans to cover spiralling budget deficits and to finance the imported products needed to keep the island's economy ticking over.

I've also had this suspicion that there could be off book loans. Some CPEC related posts here have insinuated that there could be sovereign backed private debt from China for Pakistan. The same can also be true for Sri Lanka.

But from the perspective of the Chinese, they only offer the loans and make them available to the poor countries. The rulers of these countries are the first people to be blamed for selecting these projects. It is often the case that the hapless financial situation for these countries mean that there is almost no external investment. Rulers will need fancy projects to show 'progress' to people and get reelected next time. China merely presents an opportunity for such projects and does not force them upon anyone.

 

[dbc]

Quote
It was the Canadian International Development Agency—not China—that financed Canada’s leading engineering and construction firm, SNC-Lavalin, to carry out a feasibility study for the port. We obtained more than 1,000 pages of documents detailing this effort through a Freedom of Information Act request. The study, concluded in 2003, confirmed that building the port at Hambantota was feasible, and supporting documents show that the Canadians’ greatest fear was losing the project to European competitors.
End Quote

I speak of business feasibility not engineering feasibility.

HAMBANTOTA, Sri Lanka — Every time Sri Lanka’s president, Mahinda Rajapaksa, turned to his Chinese allies for loans and assistance with an ambitious port project, the answer was yes. Yes, though feasibility studies said the port wouldn’t work. Yes, though other frequent lenders like India had refused. Yes, though Sri Lanka’s debt was ballooning rapidly under Mr. Rajapaksa. How China Got Sri Lanka to Cough Up a Port (Published 2018) A Times investigation into Sri Lanka’s handover of its Hambantota Port starkly illustrates how China turned an ally’s struggles to its strategic advantage. www.nytimes.com

 

[li0nheart]

Quote
It was the Canadian International Development Agency—not China—that financed Canada’s leading engineering and construction firm, SNC-Lavalin, to carry out a feasibility study for the port. We obtained more than 1,000 pages of documents detailing this effort through a Freedom of Information Act request. The study, concluded in 2003, confirmed that building the port at Hambantota was feasible, and supporting documents show that the Canadians’ greatest fear was losing the project to European competitors.
End Quote

Canadians sale chu#*ya kat gaye.. fansa diya bhole bhale bachhe ko.

 

[Jackdaws]

And remember what Britain and France did to Egypt for doing that.

And how did that end for Britain and France?

 

[damiendehorn2]

And how did that end for Britain and France?

China is no Britain or France.