Colombo
Sri Lanka, a thriving island country with a population of 22 million, has succumbed to China’s debt-trap diplomacy while Colombo battles most significant economic crisis in decades amid mounting debt repayment woes.
China has turned a blind eye after trapping the island country in a financial trap.
Sri Lanka is now experiencing its greatest economic crisis since obtaining independence from the British in 1948. The slump is blamed on currency shortages caused by the travel ban imposed during the COVID-19 epidemic. This has resulted in the nation’s inability to purchase sufficient fuel, resulting in an extreme shortage of food and essential commodities such as heating fuel and gas.
Sri Lanka appears to be on the edge of a “humanitarian crisis,” according to the United Nations Development Programme; as its financial troubles grow, food prices rise, and the country’s coffers run dry. According to World Bank estimates, five lakh people in Sri Lanka have fallen into poverty since the outbreak began, a “huge setback similar to five years’ worth of growth,” according to the bank.
According to some reports, Fitch downgraded Sri Lanka’s credit rating last month owing to fears about the country’s USD 26 billion foreign debt being defaulted on. The Census and Statistics Department (CSD) released figures revealing that the country’s GDP fell by 1.5 percent in the third quarter of 2021.
Several geopolitical analysts have cited Sri Lanka as an example of China’s “strategic trap diplomacy” or “debt-trap diplomacy”. To understand Sri Lanka’s instability and its connection to China’s debt trap, it is essential to highlight the role of Laos in China’s debt trap. Laos has emerged as a typical illustration of China’s debt-trap diplomacy, a nation that most people in the industrialised world would fail to identify on a map.
