HAMBANTOTA: 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.
Prime Minister Mahinda
Rajapaksa — who commissioned many of the projects — announced his resignation
Monday, the same day the anti-government protests turned violent.
But his younger
brother Gotabaya remains president.
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.
“Fiscal profligacy
over many decades and weak governance… got us into trouble,” Murtaza Jafferjee,
chairman of Sri Lanka’s Advocata Institute think tank, told AFP.
The economic woes
weighed heavy after the coronavirus pandemic torpedoed vital revenue from
tourism and remittances, leaving the import-dependent country unable to
purchase essential goods from abroad.
‘China has done its
best’ – Unable to service its growing debt burden, and with credit rating
downgrades drying up sources of fresh loans on the international money market,
Sri Lanka’s government last month announced a default on its foreign loan
obligations.
It had sought to
renegotiate its repayment schedule with China, but Beijing instead offered more
bilateral loans to repay existing borrowings.
That proposal was scuttled
by Sri Lanka’s appeal for help to the International Monetary Fund — a move that
has aroused consternation as Chinese lenders will now likely need to take a
haircut on their loans.
“China has done its
best to help Sri Lanka not to default but sadly they went to the IMF and
decided to default,” Chinese ambassador Qi Zhenhong told reporters last month.
For many Sri Lankans,
the largely unused infrastructure projects have become potent symbols of the
Rajapaksa clan’s mismanagement.
“We are neck-deep in
loans already,” said Krishantha Kulatunga, owner of a small stationery store in
Colombo.
Kulatunga’s business
sits near the entrance to the Lotus Tower, a floral-shaped skyscraper
bankrolled by Chinese funds.
The tower’s colourful
glass facade dominates the capital’s skyline but its interior — and a planned
revolving restaurant with panoramic views of the city — has never been opened
to the public.
“What is the point of
being proud of this tower if we are left begging for food?” asked Kulatunga.
0 comments:
Post a Comment