Chinese debt is not Sri Lanka’s biggest problem – Verité Research

Chinese debt is not Sri Lanka’s biggest problem – Verité Research

Written by Staff Writer

14 Jan, 2019 | 8:32 pm

Colombo (News 1st) – New information has come to light revealing that loans from China are not the main source of the debt trap that Sri Lanka is caught in at present.

Director of Verité Research Nishan De Mel speaking to News1st stated that nearly 50% of Sri Lanka’s total external debt exposure is being held by international financial markets and sovereign bonds. He noted that China holds less than 15% of the total external debt.

He went onto noted that China’s debt has longer cycles of about 19 years on average whereas sovereign bonds have a cycle of about 7 years which makes Chinese debt cheaper and easier to recycle. stated that Sri Lanka’s total external debt exposure is not mainly by China, he noted that China holds less than 5% of Sri Lanka’s total external debt and almost 50% is held by international financial markets and sovereign bonds.

Nishan De Mel concluded that Sri Lanka’s problem lies with the cost of debt and not the quantity of debt adding that neither in quantity nor the cost can China be considered to be the biggest problem.

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