Sri Lanka Crisis: Sri Lanka is under the burden of whose debt? struggling government

The Sri Lankan government, which is struggling to get the loan amount sanctioned from the International Monetary Fund (IMF), has now released the details of the entire debt on it. It has been said that the purpose of this is to clarify the situation so that efforts to get concessions from various lending countries can go ahead. The IMF has said that it will start issuing new debt only after debt restructuring (rescheduling of debt payment schedules) of the lending countries. The IMF has approved a loan of 2.9 billion for Sri Lanka, but this amount has not been released yet.

According to the details released by the Sri Lankan government, it had a total foreign debt of $ 35 billion as of June 30. This includes bilateral, multilateral, and trade loans. Of these, Sri Lanka has to pay $10.9 billion in bilateral debt, $9.3 billion in multilateral debt, and $14.8 billion in trade loans. The total economy of Sri Lanka is worth $84.5 billion.

The website economynext.com has reported in a report that the government of President Ranil Wickremesinghe faced a lot of difficulty in preparing the actual details of the total debt in Sri Lanka. The reason for this is that out of the loans taken by the previous governments, a huge amount was put into the accounts of government enterprises. Whereas in reality, the liability of this debt is also on the government itself.

China's debt to Sri Lanka is about seven billion dollars. That is, the share of Chinese debt in total debt is about 20 percent. China has been a major source of debt to Sri Lanka since the end of the civil war in Sri Lanka in 2009. Despite this, 80 percent of the debt in Sri Lanka has been taken from other sources.

According to analysts, going by the latest figures, the allegation that China has played a key role in trapping Sri Lanka into the debt trap is not correct. China has given most of the loans for infrastructure development. It is alleged that this loan was taken without a concrete assessment of the potential income from infrastructure, due to which Sri Lanka is now finding it difficult to repay it.

Sri Lanka has largely taken through sovereign (government) bonds. A significant amount of these are loans taken from private commercial sources. Such loans are relatively expensive. Whereas loans taken from multilateral agencies and under bilateral agreements have lower interest rates.

Apart from China, Japan and India have been the major sources of Sri Lanka's bilateral debt. Loans from Asian Development Bank account for 55 percent of multilateral loans.

Sri Lankan government officials have said that talks with lenders on debt restructuring have started. The outcome of this negotiation will decide when Sri Lanka will get the next installment of the loan from the IMF. Especially the ongoing talks with China are important because the IMF is not ready to issue debt without China's debt restructuring.

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