The US Says Sri Lanka Made Huge Mistakes on Chinese Investments

The US Says Sri Lanka Made Huge Mistakes on Chinese Investments

  • The United States have blamed the Chinese loans for the crisis currently rocking the south Asian country of Sri Lanka
  • According to the CIA Chief, Bill Burns, country's around the world should take a cue from what is happening in Sri Lanka
  • Other African country's are heavily indebted to the Chinese which sparks fears of debt default and possible economic crisis on the continent

The CIA chief, Bill Burns has blamed the risky bets Sri Lanka made on China for the ongoing economic crisis in the country.

Sri Lanka has suffered through food and energy shortages in the past few months and have endured lengthy blackouts and blistering inflation as the country ran out of currency to import critical foods.

Sri Lanka, CIA, US, Nigeria, China
Student activists of Krantikari Yuva Sangathan (KYS) shout slogans outside the United Nations (UN) office in New Delhi Credit: Pacific Press / Contributor
Source: Getty Images

Lessons from Sri Lankan crisis

According to Burns, high Chinese debts and investments by Sri Lanka’s leaders are responsible for the collapse of the country’s economy. Burns noted that China has a lot of weight to throw around and it can make a very juicy case for investments.

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According to AFP, the CIA boss told Aspen Security Forum that all the countries should take a look at lessons from a place like Sri Lanka, a heavily indebted country to China which has made some risky bets on Chinese investment and is suffering a political and economic turmoil as a result.

According to Burns, the crisis ought to be a critical lesson to a lot of other players not just in the Middle East or Asia but around the world.

China invested heavily in Sri Lanka and worked closely with the ousted president, Gotabaya Rajapaksa, according to The Washington Post which said China is its biggest creditor.

The debts account for about 10 per cent of the country’s foreign debt, having obtained about $12 billion in loans from China between 2000 to 2020, according to reports.

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Reports said that Sri Lanka was unable to repay about a $4 billion loan for port construction, forcing it to lease out the facility to a Chinese company for 99 years.

African countries on the brink of economic crisis

Meanwhile, a report by Business Insider has listed some African countries that may descend into chaos like Sri Lanka

The website said countries like Nigeria and Zambia are going the way of the South Asian country because of a spike in food prices and an increase in the pump price of fuel in the countries.

Last Nigeria’s Minister of Finance, Budget and National Planning said the country's revenue has declined and that debt servicing has surpassed revenue which put Africa’s largest economy on budget deficit.

Other countries mentioned by the newspaper are:

  • Egypt,
  • Tunisia,
  • Burkina Faso,
  • Mali
  • Chad
  • Kenya,
  • Ethiopia
  • South Africa

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China angling for Nigeria, Laos, and others’ Assets as default would put critical infrastructure at stake

Recall that Legit.ng reported that Laos, a South-East Asian country is on the cusp of defaulting on its loans to China after it obtained a loan to build a high-speed train which gave momentum for more debt traps.

According to reports, there is no way the country can get a bailout or debt forgiveness as it faces increasing economic and financial crises.

There is a debate as to the exact amount the country is owing China.

Source: Legit.ng

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