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Geopolitical tensions and repaying external debt

1 December 2022 03:41 am - 0     - {{hitsCtrl.values.hits}}

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On different occasions, information released to the public, regarding our external sovereign debt have not been very exact. Originally our debt was said to be around US$ 50 billion. Even now discussions are ongoing with creditors for a debt restructuring facility to qualify for US$2.9 billion, 4-year International Monetary Fund (IMF) loan. 


According to treasury figures published earlier this month, we owe US$35 billion in total, which includes bilateral, multilateral, and commercial loans as of June 30, this year.


According to treasury documents we have to repay outstanding debts of US$10.9 billion via bilateral loans, US$9.3 billion via multilateral, and US$14.8 billion through commercial loans. Unfortunately as yet, China has not made its position on restructuring the debt owed to them clear.


Yet, China is our biggest bilateral donor/creditor and is owed nearly US$7 billion or nearly 20% of the total outstanding bilateral loan. China, also at different times, provided succour when our country faced chronic problems. The Rubber-Rice Pact (where China provided us with rice in exchange for our rubber at above market price comes almost immediately to mind).


More recently, during the Mahinda Rajapaksa presidency, China became a major economic partner giving crucial assistance to prop up the regime. Despite the strengthening relationship between China and Lanka being mainly economic, it raised concerns both with India and the US. 


To India, developments in Sri Lanka are always a great matter of interest. Due to Lanka’s proximity to India, developments in our country are always a matter of great interest to India - regarding its security concerns. 
Since the LTTE insurgency, relations between India and Lanka were strained. The development of close relations between China and Sri Lanka during regime of President Mahinda Rajapaksa, in Indian eyes, appeared to give China unprecedented access to this country and raised fears in India due to its perennial border disputes with that country.


Resultantly, we see India shedding its post-independence insecurity about the presence of Western powers in its neighbourhood and attempting to balance out what it sees as China’s forays into its (India’s) sphere of influence, with closer relationships with the US - as for example the QUAD grouping a security arrangement between Australia, India, Japan and the US.  


In the more recent past - especially in the aftermath of our economic meltdown- India has proven to be a saviour to our country. At a time when hunger stalked our nation, India provided us with all manner of help ranging from lines of credit, to food, medicine and many other essentials.


Though these were loans, it helped us tide over a very difficult period when basic necessities were simply not available. Even today, memories of queues for fuel and gas are fresh in our collective memory and a constant reminder of the not too distant nightmares we faced in the period March to July this year.


The US in the meantime, continues to be our largest trading partner. A number one destination for our exports. World Bank figures reveal trade with the US is valued at US$ 2,658 million. Our second largest trading partner is the United Kingdom and our trade volume with Britain is a mere US$ 956 million!


And the US views China as a threat...
It is through this mine field of geopolitical interests that Lanka has now to tread, if it is to come out of the present financial crisis. 


We also need to show political stability to convince international creditor agencies and nations of the world, that the country has the will to rise above petty political divisions to rebuild our economy and lessen the burdens of our people.


A change in political leadership alone, will not ease the financial burdens of the ordinary people of this country. What is necessary is to focus our efforts on overcoming our debt burden.


Political sloganeering, name-calling and creating unrest will only lengthen the present difficulties. Peaceful protests, especially amid present difficulties is a people’s right. Cracking down and abusing state power cannot be condoned. Government cannot ride roughshod over the bodies of the suffering masses.


To achieve stability both sides need to dialogue with each other and negotiate, seek solutions and understand the [problems of the other. 


Not stubbornly take positions of confrontation. 


For once, let’s not ask what our country can do for us, but rather, what each of us can do for the future generation of this our country.


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