The inevitable geopolitical lens in Sri Lanka

Source– The post is based on the article “The inevitable geopolitical lens in Sri Lanka” published in The Hindu on 20th January 2023.

Syllabus: GS2- India and neighbourhood- Relations

Relevance– Trade and economic relationship with Sri Lanka

News– The article explains the status of Sri Lankan relationship with India and China. It also explains the official debt owned by Sri Lanka.

What is the status of Sri Lankan relationship with India and China?

China is a close partner of Sri Lanka and its largest bilateral creditor. At The end of 2021, the island owed about $7.4 billion or 19.6% of its outstanding public debt to China. It is called the “Chinese debt trap”.

India is Sri Lanka’s closest neighbour with shared history and geography. It is Sri Lanka’s third largest bilateral lender after Japan and a key development partner.

Last year, India extended nearly $4 billion to Sri Lanka to help mitigate its crisis. Prior to 2022, Sri Lanka owed just under a billion dollars to India.

What is the reality of official debt owned by Sri Lanka?

The “Chinese debt trap” narrative is irresistible. It owes a huge sum to a very powerful partner.

Sri Lanka debt trap is not necessarily Chinese.

The largest chunk of Sri Lanka’s foreign debt is owed to Western, private creditors holding International Sovereign Bonds.

What is the way forward for the narrative on official debt owned by Sri Lanka?

There is a need for public scrutiny of official debt. It is required to access information fiercely guarded by the establishment.

People should know about the rates of lending, period of the loan,the expenditure of borrowed money, and consequences of not repaying the debt.

Projects should not merely be seen as Indian, or Chinese assisted. They need to be evaluated on the basis of their development potential for people.


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