Sri Lanka Debt: Sri Lanka’s debt crisis is repeatedly attracting the attention of the whole world. China has also burdened Sri Lanka with debt and India has also given a lot of loans to this country. At the same time, the question is being raised among the people that which country, India or China, has given the maximum loan to Sri Lanka. Let us know who has the upper hand in terms of total debt.

Sri Lanka’s bilateral debt

According to reports, China accounts for about 52% of Sri Lanka’s total bilateral debt. With this, it has become the country’s largest creditor in this category. Sri Lanka has a direct bilateral loan outstanding of about $4.7 billion to China. However, when loans from institutions such as the China Development Bank and other commercial debts are included, total Chinese debt is estimated to rise to between $7 billion and $8 billion. This funding has been raised mostly for infrastructure projects. This includes Hambantota Port and Colombo Port City.

India’s loan exposure

In comparison, India’s share in Sri Lanka’s bilateral debt is much less. India’s share is about 10% to 12% of the total debt. According to the report, India’s outstanding debt on Sri Lanka is estimated to be around 1.74 billion dollars. India’s financial assistance has mostly come in the form of concessional lines of credit. These funds have been invested in sectors like railways, energy, housing and infrastructure development.

Although China leads in terms of total debt exposure, India played a big role during Sri Lanka’s 2022 economic crisis. At the peak of the financial collapse, India provided emergency assistance of approximately $4 million.

Commercial Loans and Concessional Credit

A big difference is in the method of giving loan. Most of China’s funding to Sri Lanka has been done at commercial rates. These often have high interest costs and strict repayment terms. India’s loan model, on the other hand, generally includes concessional loans. This means lower interest rates and longer repayment timelines.

who has the upper hand

If we talk about numbers, China clearly has the upper hand as Sri Lanka’s biggest importer. If we talk about emergency help and concessional support, India has shown great impact especially in times of crisis.

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