{"id":160802,"date":"2022-01-11T23:16:22","date_gmt":"2022-01-11T17:46:22","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=160802"},"modified":"2022-01-12T15:46:39","modified_gmt":"2022-01-12T10:16:39","slug":"dealing-with-sri-lanka","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/dealing-with-sri-lanka\/","title":{"rendered":"Dealing with Sri Lanka"},"content":{"rendered":"\n

News:<\/span><\/b>\u00a0Sri Lanka is facing a debt crisis and it has asked for assistance from China.\u00a0<\/span>\u00a0<\/span><\/p>\n

Sri Lanka is facing a debt crisis due to various factors, such as;\u00a0<\/span>\u00a0<\/span><\/p>\n

    \n
  1. Fitch Ratings has downgraded Sri Lanka\u2019s debt to the leveljust above default.\u00a0<\/span>\u00a0<\/span><\/li>\n
  2. Country\u2019sforeign debt had reached 42.6 per cent of gross domestic product. It has to pay off almost $5 billion in debt before October.\u00a0<\/span>\u00a0<\/span><\/li>\n
  3. ForeignCurrency\u00a0reserve of Sri Lanka has reduced from $8 billion before the pandemic to\u00a0a low of $1.2\u00a0billion.\u00a0It has to ban the import of certain items to preserve\u00a0Foreign Currency.\u00a0<\/span>\u00a0<\/span><\/li>\n
  4. High Inflation (11%), along with restriction on imports has led to shortage offooditems.<\/span>\u00a0<\/span><\/li>\n<\/ol>\n

    Why Sri Lanka has turned to China for assistance?<\/span><\/b>\u00a0<\/span><\/p>\n

    First,<\/span><\/b>\u00a0Closeness of Sri Lankan President Rajapaksa family with China.\u00a0<\/span>\u00a0<\/span><\/p>\n

    Second,<\/span><\/b>\u00a0China is fourth largest external creditor of Sri Lanka.<\/span>\u00a0<\/span><\/p>\n

    Third,<\/span><\/b>\u00a0People\u2019s Bank of China\u2019s $1.5-billion currency swap deal helped Sri Lanka in preserving its Foreign Exchange reserves.\u00a0<\/span>\u00a0<\/span><\/p>\n

    Fourth,<\/span><\/b>\u00a0it is notable that the Hambantota port was famously handed over on a 99-year lease to a Chinese firm in 2017 under the debt restructuring agreement. However,\u00a0China has shown sensitivity to the criticisms of its foreign infrastructure financing\u00a0as a \u201cdebt-trap diplomacy\u201d. So, Sri Lanka is expecting debt restructuring from China over its\u00a0$1.5 billion debt, which is due this year.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

    Why India has not been asked for help?<\/span><\/b>\u00a0<\/span><\/p>\n

    On the other hand,\u00a0India has not\u00a0acted with the required speed and scale.\u00a0\u00a0For example, the RBI last year renewed a mere $400 million\u00a0swap\u00a0line to Sri Lanka, in comparison\u00a0to its\u00a0repeated\u00a0request\u00a0for at least a $1 billion swap\u00a0line.<\/span>\u00a0<\/span><\/p>\n

    Delaying the request for assistance is likely to push Sri Lanka\u00a0towards China,\u00a0which\u00a0has been more responsive with lesser efforts.\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

    Source:<\/span><\/b>\u00a0This post is created based on the article \u201cDealing with Sri Lanka\u201d published in Business Standard on 11<\/span>th<\/span>\u00a0Jan 2022.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    News:\u00a0Sri Lanka is facing a debt crisis and it has asked for assistance from China.\u00a0\u00a0 Sri Lanka is facing a debt crisis due to various factors, such as;\u00a0\u00a0 Fitch Ratings has downgraded Sri Lanka\u2019s debt to the leveljust above default.\u00a0\u00a0 Country\u2019sforeign debt had reached 42.6 per cent of gross domestic product. It has to pay… Continue reading Dealing with Sri Lanka<\/span><\/a><\/p>\n","protected":false},"author":10323,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,212],"class_list":["post-160802","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-2","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704826968},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/160802","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10323"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=160802"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/160802\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=160802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=160802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=160802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}