Chinese debt trap- Western propaganda

Chinese loans are just 10.6% and not growing of the total foreign loans taken by Sri Lanka over the years and most are concessionary and given at a low interest rate of 2%.

This is in contrast to the many loans obtained from western institutions like the IMF,World Bank and the ADB which provides loans for far beyond 5% interest. In reality, Sri Lanka owes more to US investors than China.

In 1977 there came a new government ,this government was leaning towards capitalism and open markets. They basically liberalized the economy and allowed foreign goods from the west to flood into Sri Lanka.

This created a huge trade deficit and killed off the emerging industrial base in Sri Lanka. By 1986 Sri Lankas foreign debt was at $ US 4063 million. To pay off the ever increasing debt Sri Lanka resorted to seeking help from the IMF and World Bank.

When IMF gave loans to Sri Lanka had to do whatever IMF asked them to do . IMF started to act like a they own Sri Lanka, Sri Lanka had to dance to the tunes played out by the IMF. They had to change social and economic policies because of this .

Sri Lanka which proudly boast a history of 2000 years virtually became a slave to the west. To top this off a dangerous and a brutal Civil war was ongoing in Sri Lanka since 1983.

Worst part is thanks to the unrestricted openness Sri Lanka had, that it became a hub for drug transshipments. Drugs were virtually non-existent before the open economy but they became rampant in the country.

After a long time Sri Lanka had a leader who did not dance to the tunes of the UN or the west. Because of this he managed to stabilize the country by ending the civil war in Sri Lanka. Before he became the president Sri Lanka had more Child Soldiers than Congo.

The west really disliked the new Sri Lankan government. West started to isolate Sri Lanka over its populist stances. Pakistan was literally the only country aside from China that stood in support of Sri Lanka when they needed support the most.

Though China had diplomatic and very strong ties with Sri Lanka since 1956 their presence grew even stronger under this new government. They took the place that the west had in Sri Lanka since 1977. China allowed them to follow their own policies and development program.

A lot of foreign investors started to invest in Sri Lanka from all over the world. The Sri Lankan GDP went from 20 billion USD in 2005 to 84 billion USD in 2015. Because of the new infrastructure Sri Lankan tourism started to skyrocket .

The debt reduced rather than increased

Hambantota port issue

A common and popular myth is that Sri Lanka was unable to pay off the loan obtained to construct the port, thus it was handed over to China.

However, by the time the Sri Lankan government entered into the agreement with CM Port to lease Hambantota port, the debt servicing cost pertaining to the loans obtained from China Exim bank to construct the port did not amount to much.

Those loan installments (including interest) amounted to less than 5 percent of Sri Lanka’s total foreign debt repayments. Furthermore, loan repayments pertaining to the second phase of the Hambantota port project were yet to start at the time.

The economic reality is that Sri Lanka leased out Hambantota port to China largely due to a persistent balance of payment (BOP) crisis resulting from the reduction of trade over the years even while external debt servicing costs have been soaring.

So basically the Americans (and other financial institutions) put Sri Lanka under such a massive debt burden that the Sri Lankans had to sell an 80% ownership to their port for funds. Then when China took up the offer, the US then started a vicious, global propaganda campaign.