Sri Lanka’s economic catastrophe is a harbinger of more monetary woes in poorer countries. China, the ATM of the developing world, has to decide if it is part of the solution or part of the problem | OPINION from Peter Hartcher
There is nothing new about nations collapsing under the weight of their debts. But Sri Lanka’s awful predicament highlights three new aspects of our world.
When Sri Lanka’s President Gotabaya Rajapaksa abandoned his palace to rampaging protesters last week and fled abroad – emailing his resignation from Singapore in a contemporary twist – it brought the political crisis to a head. A parliamentary vote for a new president is expected this week. The International Crisis Group’s Alan Keenan faults Beijing on two grounds. One, it encouraged expensive infrastructure projects that failed to produce major economic returns.
Before the pandemic, the IMF was supporting about 20 countries. Today it supports 90. COVID cost countries everywhere a fortune. Others high on the danger list include Laos, Pakistan, Bangladesh and the Maldives. And guess who has been a big lender to all of them? Their friendly neighbourhood ATM, China. As one commentator put it, “China’s Belt and Road program has hit a major pothole”.
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