nelsonoski
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Sri Lanka Watch, News and Discussions
- Thread starter pyromaniac
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the word is predatory lending:
-chinese funded projects do not do cost benefit analysis.
-chinese funded projects mandate projects be given to chinese companies, chinese materials, chinese labour. ineffect majority of project money goes back to china. and SL is expected to repay the same amount with interest. for a billion $ loan, china probably gets back 2.5 billion $ returns.
-chinese funded projects, if there is loan default chinese companies take over the asset under long term lease.
-chinese funded projects, some of them are non productive assets like cricket stadium and refurbishing of presidential palace.
-loan repayment terms and conditions are not known to public.
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Those 47 percent market borrowings are chinese debt trap as most of these are from chinese thiefs like vivo.
shade
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Used to deflect Ching's role in this, I doubt their Chinese built infrastructure projects are covered under this, which are also debt financed
another_armchair
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Yeah.. Japan and US forced dollars down their throats. They enjoyed the money while it rained, now the bill collector is at the door... naive or plain greedy?
another_armchair
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- Also get to dictate foreign policy, strategic affairs and get a special chair at the end of the table facing the leader of the nation.
Jimih
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Greedy and lazy arses.
Kumata
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Apparently, Gota have fled to maldives ...
www.indiatoday.in
Sri Lanka President Gotabaya Rajapaksa flees to Maldives as protests escalate | Top Points
Sri Lankan President Gotabaya Rajapaksa has fled to the Maldives as the massive protests over the economic crisis in the island nation continued to escalate.
www.indiatoday.in
No .. the 47% are their own international bonds that they raised .. A lot of foreign investors taking a cue from the usual ideological economists bought said bonds.
The bonds kept selling even when they started issuing new bonds to pay off old ones . The pyramid scheme only collapsed because of the kung flu otherwise they could have chugged along for a few more years.
Important to keep in mind. When the govt in power represents an ideology they approve of, only then is bad economic and fiscal policy possibly the reason for such a situation. Even then the 'No true scotsman fallacy' is something that is trotted out ie 'no vro you don't understand, they didn't follow true socialism.'
When the ideology of the govt in question is not kosher every visible issue and shortcoming is only due to that reason and not anything else. eg authoritarianism, majoritarianism, fascism, intolerance, hate politics, etc
I find it strange btw with a country in such apprent dire turmoil there is a month long cricket series that is going on in the background with no issues.
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No seasoned investor will invest in third countries listening to some economists. They all do their market research.
Economist only sound good on new channel but no one cares about their views.
When one's own money is on the line the said entity is very careful.
Their is a lot of money available with investors (especially institutional investors). Instead of parking the money they will invest throughout the world and these investors have invested peanuts in Sri Lanka compared to their other investments.
These looses are negligible to these investors but these looses damages Sri Lanka's brand image.
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I would say combination of corruption, sycophancy, wishful thinking, incompetency, coercion and bad-luck.
They accepted investment to improve infrastructure (everyone does that and nothing) but they didn't do proper cost benefit analysis (sycophancy, incompetency and wishful thinking comes into play here).
They had three expectation with their infrastructure
- It will increase tourism revenue (by making tourism comfortable and increase tourism outreach within Sri Lanka-by making more destination with tourist reach)
- Help increase agricultural, mining, textile and most importantly IT output. (their was an expectation that IT jobs that are generally exported to India will also flow into Sri Lanka)
- They believed that freight that goes to Chennai and to south east India will embark and disembark in Sri Lanka's port. They will collect toll to recover the cost of investment.
Once world saw what PRC is doing in Sri Lanka the world stopped paying Sri Lanka.
Finally we have COVID-19.
All this things resulted in the mess Sri Lank is in now.
The fact remains no one has the courage or interest to tell the dictator or ruling family that they are wrong.
shade
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Rajapaksa clan was happy with Chinki funded/built/supplied infrastructure because they all were getting bribes, plus it was a loan, and they could toot about these fancy roads, railways, powerplants ports whatever to prospective voters as development at no cost to them the loans could be paid off in the """future""".
Then the chinese virus happened, that tanked their tourism revenue heavy economy, and to add ghee to the fire one of the Rajapaksa bros did the immensely retarded thing of banning normal fertilizers and making OrGaNiC FaRMiNG mandatory.
They never bothered to do any cost-benefit analysis because it never mattered to them, loot is the main objective, just pocket the loot and run away to some foreign country and enjoy the booty like many greedy dictators have done in the past.
The Ching chong is blessed that all these "free infrastructure projects" debt-trap victims end up being greedy ghoos-khors, they have 0 interest in development of the country and only enriching themselves and their family.
Gota is already off to the Maldives, and soon he will be off to some Western country or UAE, and so will the remainder of his bros and other clansmen follow him.
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On the first two points, are there any projects that indicate that SL Govt spent money on these things?
Jimih
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Residential condos owned by Indocean developers Pvt Ltd, Colombo. Which in turn is promoted by South City Projects Pvt Ltd, Kolkata.
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Politically motivated infrastructure projects part of the reason for Sri Lanka's economic crisis
The Sri Lanka government embarked on a series of infrastructure projects, including the Hambantota Harbour and Colombo Port City. With the promise of strong revenues and a stronger foothold in the project commercial landscape, Sri Lanka took loans from other countries including China, to finance...
On paper their was a massive upgrade to road and rail network.
Couple of international grade airport were built needlessly.
Couple of needless port were built and capacity of some ports was increased with no need.
Colombo Port City.
Kumata
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All went to gota's Distt ... He apparently fled from this very airport and was initially denied landing in Maldives... Most probably call went from Delhi than only he was allowed to land in maldives... US et all have denied him VISA earlier....
Politically motivated infrastructure projects part of the reason for Sri Lanka's economic crisis
The Sri Lanka government embarked on a series of infrastructure projects, including the Hambantota Harbour and Colombo Port City. With the promise of strong revenues and a stronger foothold in the project commercial landscape, Sri Lanka took loans from other countries including China, to finance...www.cnbctv18.com
On paper their was a massive upgrade to road and rail network.
Couple of international grade airport were built needlessly.
Couple of needless port were built and capacity of some ports was increased with no need.
Colombo Port City.
The Story Behind The World's Emptiest International Airport
Riding a deluge of Chinese financing, Sri Lanka’s Mattala Rajapaksa International Airport was meant to become the country's number two airport and act as a catalyst for development in the region. But it hasn't yet worked out that way. With only one or two flights per day, the airport hangs on...
www.forbes.com
Same is the case with Sea port which china is using openly for military purpose...
shade
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China’s failing white elephant projects in Sri Lanka have lessons for India
Five years after it acquired Hambantota, China is learning cash has bought neither profit nor power in Sri Lanka.
theprint.in
Nice article, apparently Bheek Lanka has been addicted to (((credit))) since their independence, loan pe loan, they are American by heart.
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Eleven hundred feet over the Colombo skyline, the giant, hot-pink lotus thrusts out of its green metal stem. Financed with almost $100 million in loans from China, the Nelum Kuluna tower was to be the tallest building in all South Asia, housing luxury hotel rooms, conference halls, shopping malls, and the infrastructure needed to power digital television networks. From the top of the Nelum Kuluna, visitors could see a great jungle of cranes and dredgers at work, raising an entire city from the sea.
The tower is empty, a monument to the ruin of a nation. The new city near it will almost never rise from the mud. The $190-million international airport meant to serve the city hasn’t had a scheduled flight since 2018. Elephants roam the area, and the main access road is used by villagers to dry pepper.
“I tell you, money can’t build your spire,” William Golding wrote in his 1964 masterpiece, The Spire, which tells the story of a hubris-driven cleric determined to raise a steeple from a cathedral with no foundations. “Build it of gold, and it would simply sink deeper.”
The surreal disintegration of Sri Lanka’s economic and political system marks a disaster for Chinese President Xi Jinping’s Belt and Road Initiative (BRI), designed to grow China’s power across Asia and Africa. For New Delhi, this is an opportunity—but also a nightmare. Fears are mounting that Sri Lanka could join the long list of failing States on India’s peripheries—Afghanistan, Pakistan, Nepal and Myanmar. New Delhi has pumped almost $4 billion in soft loans and aid—but it knows this isn’t a long-term solution.
In the crumbling of China’s dreams in Sri Lanka, there’s a warning for India: The land of white elephants is full of hidden swamps, in which good intentions and hard cash can disappear without trace.
The Game of loans
Like Roman god Janus, Sri Lanka’s leaders looked both East and West at the same time— from early in its post-independence history, the country had learned to leverage great power geopolitical competition. Fearing his Marxist opponents, then prime minister Don Stephen Senanayake allowed the United Kingdom to retain its naval base in Trincomalee, and a presence at Katunayake airport, near Colombo. In 1952, though, he also began trading with China, bartering rubber for rice.
Even though China was cash-strapped, it also provided more than $41 million to Colombo by 1968. China scholar George Lerski noted in a 1974 essay that the country became Sri Lanka’s “most reliable source of loans and grants.”
For its part, the Soviet Union also stepped in to compete for geopolitical influence on the island. In 1956, after the neutralist government of prime minister SWRD Bandarnaike took office, Moscow provided some $24 million in soft loans to finance several industrial projects. Following the nationalisation of United States oil company assets in 1962, Soviet-bloc aid escalated significantly, crossing $50 million.
The government of Dudley Senanayake, which took power in 1965, turned West again. The United States responded by assembling a coalition, which extended loans of $50 million.
From 1970, Sri Lanka lurched Left. Now, China sought to contain Soviet influence in the region, offering Sri Lanka a $27 million loan. In the summer of 1972, just one month after Sri Lanka failed to secure a bailout from the IMF, China gave the country an interest-free $40 million loan, repayable over 20 years.
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Land of white elephants
Long before the new tide of Chinese investment washed over Sri Lanka under Mahinda, it was clear the projects he was promoting had weak foundations. In the 1970s, Mahinda’s father, Don Alwin Rajapaksa, had called for a port to be built in his home district, Hambantota. In 2003, Sri Lanka had rejected proposals by the Canadian engineering firm SNC Lavalin to explore this idea. The SNC Lavalin plans were—correctly—determined to involve excessively optimistic assumptions.
Even though regime-linked cronies are reported to have profited from port-construction contracts, Hambantota did little for Sri Lanka. The port never came close to achieving the traffic projections it was based on. And the promise that it would generate over 100,000 jobs proved a chimera.
Financing Sri Lanka’s foreign debt—the bulk of it commercial market borrowings—was meanwhile becoming increasingly challenging. The ratio of debt to gross domestic product spiralled from 36 per cent in 2010 to 94 per cent by 2015—and over 110 per cent last year.
To help its debt repayments, Sri Lanka found itself compelled to grant a 99-year lease on the port to China Merchants Port in 2017, in return for an $1.1 billion. The government used that money, until its recent bankruptcy, to service debts to China, and other lenders.
Even as Hambantota floundered, China announced its largest single investment in Sri Lanka. The Colombo Port City project was inaugurated in 2014 by president Xi, the year after he launched the Belt and Road Initiative to build road, rail and maritime infrastructure across Asia. The project was intended to become a financial centre to rival Dubai and Singapore, complete with homes for 80,000 people and a marina.
For a 99-year lease on 43 per cent of the land, the China Harbour Engineering Corporation was to sink in the estimated $1.4 billion needed to build the project. But Sri Lanka, already drowning in debt, would have to raise the $1 billion needed for roads and infrastructure.
In March 2015—a week before a State visit by Prime Minister Narendra Modi—President Maithripala Sirisena’s new government put the Port City project on hold. He was forced to back down, Karthik Sivaraman has shown, because of unsubtle arm-twisting by Beijing.
Five years after it acquired Hambantota, though, China is learning cash hasn’t bought it either profit or power. Leaders across the region, who eagerly signed up for Xi’s BRI cash, will be wondering if it might lead them to the fate of Sri Lanka’s ruler.
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