On Wednesday, Sri Lanka’s prime minister said that China has pledged to develop the island nation’s strategic deep sea port and the capital’s airport after talks with his counterpart in Beijing.
Prime Minister Dinesh Gunawardena said China—the island’s biggest bilateral creditor—would “assist” Sri Lanka in restructuring its external debt, a critical condition for maintaining a $2.9 billion IMF bailout.
Beijing’s position on debt restructuring has not been made public, but Sri Lankan officials have said China was reluctant to take a haircut on its loans but could extend the tenure and adjust interest rates.
In 2022, Sri Lanka ran out of foreign exchange to finance essential imports and declared a sovereign default on its $46 billion foreign debt.
After months of protests, they forced then-president Gotabaya Rajapaksa out of office.
Gunawardena’s office said Premier Li Qiang had promised China would “continuously assist Sri Lanka’s debt restructuring process and help Sri Lanka develop its economy.”
The statement added that Gunawardena had offered Beijing “assistance to develop” Colombo International Airport and Hambantota port without giving further details. A Japanese-funded expansion of Colombo airport had been on hold since Sri Lanka’s sovereign debt default.
The southern sea port of Hambantota was handed to a Chinese state-owned company in 2017 on a 99-year lease for $1.12 billion, sparking security concerns in Beijing’s regional rival India.
