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Tuesday, August 9, 2022

‘Opaque’ loans from China hurt Sri Lanka: USAID Administrator, Samantha Power

Image: Worlds emptiest Air Port was built by 2 billion Doller loan from China in Rajapaksa homeland, Hambantota.

“Opaque” loans for “headline-grabbing” infrastructure projects, were among the factors behind the current crisis that has engulfed Sri Lanka, said Samantha Power, Administrator, United States Agency for International Development (USAID), on Wednesday. Delivering a speech at the IIT-Delhi, Ms. Power praised India’s “swift” action in response to the emergency in Sri Lanka and argued that India’s strength especially in the field of tackling food security threats, was nurtured over the past seven decades in partnership with the United States.

Ms. Power cited the Upanishads and urged India to play a greater role in the world in tackling hunger and poverty, which have intensified in the backdrop of the Ukraine crisis. She made a strong pitch in favour of “pluralism and tolerance” saying there are “forces in the United States and India who seek to sow divisions, who seek to pitch ethnicities and religions against each other”.

“Indeed, over the past two decades, China became one of Sri Lanka’s biggest creditors, offering often opaque loan deals at higher interest rates than other lenders, and financing a raft of headline-grabbing infrastructure projects with often questionable practical use for Sri Lankans,” said Ms. Power. China, she pointed out, has not answered calls for greater relief to Sri Lanka, and said the “biggest question of all is whether Beijing will restructure debt to the same extent as other bilateral creditors”.

She said the United States extended $180 million to Sri Lanka in emergency financing in 2022 and praised India for coming to Colombo’s help, saying, “The Government of India has already supplied $16 million in humanitarian aid to Sri Lanka, it has exported 100,000 tons of organic fertilizer to try to help farmers stave off future food shortages, and it has supplied $3.5 billion in Lines of Credits to the Government of Sri Lanka as it attempts to steer its economy out of default and further collapse.”

Ms. Power sounded a note of caution about the cascading political effect that global food insecurity can have in the coming months. “Sri Lanka’s government was the first to fall. 17 countries are facing (similar) protests,” said Ms. Power.

Excerpts from a longer article by Kallol Bhattacherjee  in Hindu.

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