The abandoned Chinese projects: Chinese-funded projects that stand as monuments to government excess — an airport without planes, a rotating restaurant with no customers, and a seaport saddled with debt — have aggravated Sri Lanka’s economic crisis. Now, the abandoned Chinese projects serves no use to Sri Lanka.
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Sri Lanka’s economic crisis
The South Asian island nation borrowed heavily to cover years of budget shortfalls and trade deficits, but squandered vast sums on ill-conceived infrastructure projects that have further depleted public funds.
Consequently, which are the abandoned Chinese projects.
It is experiencing its worst financial crisis since its independence from Britain in 1948. Its 22 million residents have been without power for months and have had difficulty obtaining food and fuel.
After weeks of mostly peaceful protests demanding the government resign over its mismanagement of the economy, things turned violent Monday when pro-government supporters clashed with demonstrators, killing five people and injuring at least 225.
Many of the white elephant projects that fueled the crisis are now gathering dust in Hambantota district, home to the powerful Rajapaksa clan, which used its political clout and billions of dollars in Chinese loans to try to turn the rural outpost into a major economic hub.
However, the abandoned Chinese projects were the result of the economic crisis.
Prime Minister Mahinda Rajapaksa, who oversaw many of the projects, resigned on Monday, the same day that anti-government protests turned violent.
Therefore, the abandoned Chinese projects were no use now.
His younger brother, Gotabaya, remains president.
The deep seaport on the world’s busiest east-west shipping lane was the most important component of the infrastructure drive. Its goal was to encourage more businesses to start up.
Instead, it has been losing money since its inception.
“When the projects were announced, we were very hopeful, and this area did improve,” Dinuka, a long-time resident of Hambantota, told AFP.
But it no longer has any meaning. That port is not ours, and we are fighting for our lives.”
Thus, leaves the abandoned Chinese projects.
The Hambantota port was unable to repay the $1.4 billion in Chinese loans used to build it, resulting in a $300 million loss over a six-year period.
The Abandoned Chinese projects in Sri Lanka
The seaport was leased to a Chinese state-owned company for 99 years in 2017. People in the area were concerned that Beijing had gained a strategic foothold in the Indian Ocean.
Concerning, the abandoned Chinese projects.
Another Chinese-backed extravagance overlooks the port: a $15.5 million conference center that has sat mostly empty since it opened.
Nearby is the Rajapaksa Airport, which was built with a $200 million loan from China and is so infrequently used that it was unable to cover its electricity bill at one point.
Yet, the abandoned Chinese projects still is the issue.
The Port City project in Colombo, funded by China, is a 665-acre man-made island intended to compete with Dubai as a financial hub.
However, critics have already expressed concerns about the project becoming a “hidden debt trap.”
China is the government’s largest bilateral lender, accounting for at least 10% of its $51 billion in external debt.
Analysts believe the true figure is much higher when state-owned enterprises and Sri Lanka’s central bank are included.
Sri Lanka’s bad financial situation is the result of years of borrowing to cover growing budget deficits and to pay for imports that kept the economy running.
And now, the abandoned Chinese projects were one of the problem.
“Many decades of fiscal profligacy and weak governance have gotten us into trouble,” Murtaza Jafferjee, chairman of Sri Lanka’s Advocata Institute think tank, told AFP.
The coronavirus pandemic had a significant impact on tourism and money sent home, making it difficult for a country that relied on imports to purchase items from other countries.
Sri Lanka’s government declared a default on its foreign loan obligations last month, unable to service its growing debt burden and with credit rating downgrades drying up sources of new loans in the international money market.
Thus, making the abandoned Chinese projects no use.
It attempted to change the terms of its payments to China, but China instead offered more bilateral loans to pay off the debts it already owed.
Sri Lanka’s request for IMF assistance put an end to that plan. This move has alarmed Chinese lenders, who will now have to write off their loans.
“China did everything it could to help Sri Lanka avoid default, but they went to the IMF and decided to default,” Chinese ambassador Qi Zhenhong told reporters last month.
Many Sri Lankans see the unfinished infrastructure projects as powerful indicators of how badly the Rajapaksa clan has run the country.
“We are already neck-deep in loans,” Krishantha Kulatunga, owner of a small stationery store in Colombo, said.
Kulatunga’s business is near the entrance to the Lotus Tower, a flower-shaped skyscraper built by Chinese investors.
Even though the tower’s colorful glass exterior dominates the capital’s skyline, its interior has never been open to the public. This includes a planned rotating restaurant with a 360-degree view of the city.