Prime Minister Ranil Wickremesinghe said his country is seeking foreign investment from India, Japan and others amid criticism over his country’s reliance on Chinese loans for infrastructure projects.
In an interview to Bloomberg in Colombo, Wickremesinghe defended a deal last year that gave a joint venture led by state-owned China Merchants Port Holdings Co Ltd a 99-year lease to the southern port of Hambantota. The agreement gave Sri Lanka $1.1 billion in revenue at a time when it’s spending 80 percent of government revenues on servicing outstanding debts.
“On Hambantota, the burden is off us, because China Merchants and the Sri Lanka Ports Authority have taken it over,” Wickremesinghe said on the sidelines of a business conference on Monday.
“We’ve been looking at inviting a broad range of foreign investors,” he said. “Initially, the investors will come from China, Japan, India. Then the others will follow. We’d like to see them coming in from Europe.”
Since Wickremesinghe took power in 2015, he’s been under pressure to improve Sri Lanka’s finances. A previous administration secured billions of dollars worth of Chinese loans after the South Asian nation emerged battered from three decades of civil war in 2009, contributing to a debt burden that threatens to impede economic growth.
Even with the sale of Hambantota and other concessionary measures, Sri Lanka has been forced to pursue other revenue-raising measures, including a recent tax reform. The country’s total debt to China was $5 billion at the end of 2017, according to government treasury figures.
“It’s an easing of the Chinese part of the debt burden, but we have the international sovereign bonds, so 2018, 2019 and 2020 are going to be tough years for us,” Wickremesinghe said.
Sri Lanka’s $1.5 billion 2027 bonds fell 9 cents on the dollar this year to 96.4 cents on Tuesday, near a record low since issuance last year, according to Bloomberg-compiled data.