All the blame for the crisis in both countries cannot be placed on Beijing’s shoulders as most of you lie in the shocking leadership of these nations.
Eighteen miles from the Chinese port of Hambantota in Sri Lanka is the Mattala Rajapaksa International Airport, which unfortunately has secured the status of the least used airport in the world. Built during Mahinda Rajapaksa’s presidency, both the port and the airport, built with high interest rates from the Chinese bank EXIM, are a reminder of the financial woes inflicted on the Icelandic rulers by deep economic and political crises.
Like Sri Lanka, Pakistan has also benefited greatly from economic assistance from China and has also entered into political and economic crisis. Instead of Chinese loans making the two economies stronger, Beijing’s consumer provinces have literally collapsed due to the global economic crisis caused by the epidemic, which is strangely based in Wuhan, China.
Sri Lanka is currently struggling under protests over rising inflation; Pakistan has lost for free as Imran Khan Niazi is now Prime Minister in his name after completely exposing the weakness of democracy in the Islamic Republic for a living.
The Chinese-dominated Chinese Communist Party (CCP) dismisses Beijing’s aggressive economic policies as Western propaganda and emphasizes that the loans made to countries like Pakistan and Sri Lanka are just a small part of all debt portfolios. These Chinese claims are confirmed by the clearly available information on government-to-state loans from China. But this is only part of the story as information on real loans or foreign loans due to guaranteed return on investment, commercial loans etc. not easily accessible.
As in Pakistan, Beijing is adamant that loans account for 10% of Sri Lanka’s total foreign debt. This appears to be $ 5 billion in total debt of approximately USD 51 billion. The smart project loans granted to Chinese bank EXIM are estimated at USD 4.8 billion, of which only USD 1 billion has an interest rate of 2 percent while the remaining six percent is higher.
In Pakistan, Exim Bank of China has lent USD 11 billion (agreement) with interest rate of 1.6% on infrastructure projects and another USD 15.5 billion (commercial) with interest on 5-6 per cent interest on electricity projects under China. Pakistan Economic Corridor, part of the BRI is also designed to give Beijing access to the Arabian Sea and beyond. All loans are made in USD dollars, which protect China’s exposure to exchange rate fluctuations but also increase the cost of solid currency for borrowers. In Pakistan, the debt burden has grown steadily due to the constant decline in the value of Pakistani Rupee by an average of six per cent per year. In Sri Lanka, the Lankan Rupee collapsed in just a few days, increasing the cost of very hard currency.
All the blame for the crisis in both countries cannot be placed on Beijing’s shoulders as most of you lie in the shocking leadership of these nations. As a result of the ease of access to finance loans from China to finance major infrastructure projects that give the impression of rapid economic development in an easily deceived society, this leadership has released financial intelligence and economic success through the window to maintain political power. With Beijing neutral on both sides of the debt crisis or inefficient, these politically viable loans are now going to plague both countries.
Hambantota Harbor in Sri Lanka and Gwadar Port in Baluchistan Peace in Pakistan are ancient examples of white elephant projects. Both ports are well-structured but are not commercially viable as there is not enough traffic. China has already acquired Hambantota and it is not a matter of imagining that it will also get Gwadar in the coming months. The fact is that no real revenue from these ports and cargo is diverted from the port of Colombo and Karachi to maintain efficiency. At present, Matala airport is sometimes used for paddy storage.
The level of profitability of Chinese companies doing projects is also less well known. In Pakistan, the Leaked Power Producers Report was mistakenly dated April 2020, which examined, among other things, two hot power projects in Sahiwal and Port Qasim. Both were killed by Chinese companies. Of the two projects costing USD 3.8 billion, the report found an overpayment of Pak ₹ 483.64 billion or approximately USD 3 billion.
As the Ukraine-Russia war shows no signs of any decision and parts of China are hit by the coronavirus, global finance will continue to plummet, placing countries like Sri Lanka and Pakistan in a high-risk investment climate as they also face a crisis. political upheaval. The dragon’s economic cooperation will be costly for both Islamabad and Colombo with an easily accessible mass that will be embarked on a royal voyage.