An agreement over restructuring of bilateral loans is important to Colombo as this is one of the requirements for an International Monetary Fund (IMF) bail-out agreement, by Rahul Kumar
Sri Lankan President Ranil Wickremesinghe said on Thursday that the Indian Ocean region should be open to all for freedom of navigation. He also said that Sri Lanka was open to the navies of all countries, hinting at a possibility that Chinese ships are likely to pay a visit to Sri Lankan ports in the future.
Wickremesinghe added that Sri Lanka does not want to be part of any “big power rivalry” in the Indian Ocean region and lamented the fact that geopolitics had made Sri Lanka a “punching bag”. In a bid to defend the visit of a Chinese research ship to the Hambantota port, he also said that the Chinese operate around 17 ports in the Indian Ocean including the Hambantota Port.
So, what has prompted Wickremesinghe to launch a tirade about the Indian Ocean not being free and open? Is he sending a signal to China which has kept mum about restructuring debt despite numerous requests to Beijing since Foreign Minister Wang Yi’s visit to Colombo in January 2022.
Dhananjay Tripathi, Associate Professor in the Department of International Relations at South Asian University, Delhi, told India Narrative: “The timing of his statement is a bit confusing because the world including Japan are helping Sri Lanka come out of the crisis. It is possible that Wickremesinghe is posturing keeping Beijing in mind because China has not said anything about restructuring the loans it gave to Sri Lanka.”
An agreement over restructuring of bilateral loans is important to Colombo as this is one of the requirements for an International Monetary Fund (IMF) bail-out agreement. But China has been evasive over restructuring its infrastructure loans that enabled Colombo to build the Hambantota port, an international airport that lies unused, the Lotus Tower and similar other projects.
Without a Chinese nod over bilateral debt restructuring, Sri Lanka’s IMF bail out could face hurdles. Japan and India are in agreement over restructuring their debts and paving the way for IMF support. Japan has even taken a lead in trying to organise a meeting of Sri Lanka’s creditors.
This year Colombo weathered a major economic challenge with New Delhi’s $4 billion support. It enabled the country to pull back from the brink of a major humanitarian disaster after it had little forex for importing essential commodities including food and oil.
India too has hinted that it does not intend to continue financial support to Sri Lanka as it has given enough. Media reports in Sri Lankan newspapers have said that India now hopes the IMF will take over.
“India’s statement is not borne out of frustration. It is just fanciful to think that India alone will keep helping Sri Lanka in its financial crisis while the world watches. India has responded well as a neighbour at a time when financial crisis was as its peak. Now, the international community has to pitch in and help,” says Tripathi.
The island nation has hired international consultants to help it restructure its debt with its major bilateral lenders. But Sri Lanka is still learning how to placate a silent China and balance itself between powers.
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