China to develop Sri Lanka’s deep sea port and airport

Contact Counsellor

Last Updated29/03/2024

Sri Lanka’s Prime Minister said that China has pledged to develop the island nation’s strategic deep sea port and the capital’s airport after talks with his counterpart in Beijing.

Sri Lanka said China - the island’s biggest bilateral creditor - would “assist” Sri Lanka’s restructuring of external debt, a key condition to maintaining a $2.9 billion IMF bailout.
Beijing’s position on debt restructuring has not been made public
- But Sri Lankan officials have said China was reluctant to take a haircut on its loans but could extend the tenure and adjust interest rates.
Sri Lanka in 2022 ran out of foreign exchange to finance essential imports and declared a sovereign default on its $46 billion foreign debt.
Beijing had offered “assistance to develop” Colombo International Airport and Hambantota port.

A Japanese-funded expansion of Colombo airport had been on hold since Sri Lanka’s sovereign debt default.

The southern sea port of Hambantota was handed to a Chinese state-owned company in 2017 on a 99-year lease for $1.12 billion.
India and the U.S. are both concerned that a Chinese foothold at Hambantota, on the island’s southern coast, could boost its naval advantage in the Indian Ocean.