Rethinking the External Debt Issue of Sri Lanka: Causes and Implications 74 China International Studies 2019

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74 China Int'l Stud. 138 (2019)
Rethinking the External Debt Issue of Sri Lanka: Causes and Implications

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Rethinking the External Debt Issue of

Sri Lanka: Causes and Implications

Ning Shengnan

S ri Lanka is a small but important country on the 21st Century
Maritime Silk Road. Ever since the end of civil war in 2009, the Sri
Lankan economy has achieved remarkable growth. However, the debt
problem, especially the external debt issue, keeps on perplexing this Pearl
of the Indian Ocean. Chinese investment in Sri Lanka is regarded by some
as the root cause of this problem. To some extent, this issue has cast negative
influence on the Sino-Sri Lankan relations. Therefore, it is vitally important
to identify and analyze the real sources of Sri Lanka's external borrowings.
Moreover, assessing the implications of this issue on China-Sri Lanka
relations is conducive to strengthening bilateral friendship and deepening the
economic ties, thus facilitating the advance of the Belt and Road Initiative.

Situation of Sri Lanka's External Debt

According to definition by the International Monetary Fund (IMF), a
country's external debt refers to the outstanding amount of those actual
current, and not contingent, liabilities that require payment(s) of principal
and/or interest by the debtor at some point(s) in the future and that are owed
to nonresidents by residents of an economy.' The volume and structure

Ning Shengnan is Assistant Research Fellow at the Department for Developing Countries Studies, China
Institute of International Studies (CIIS).
1 IMF, External Debt Statistics: Guide for Compilers and Users, 2014, p.5.

Retinking the External Debt Issue of Sri Lanka: Causes and Implications

13 8 China International Studies