Sri Lanka’s Foreign Minister hails Chinese investment, dismisses notion of ‘debt-trap diplomacy’

The southern Hambantota Port became another case in point – it led the country to be labelled a poster child for the so-called Chinese debt trap narrative after a Chinese state-owned operator took control of the port on a 99-year lease after Sri Lanka defaulted on its loans.

However, like Mr Sabry, some analysts have also dismissed the so-called debt trap diplomacy.

Chairman of policy think tank Advocata Institute Murtaza Jafferjee said: “It’s not a debt trap of China’s creation. But our debt issues, because out of our total debt, about 55 per cent of it is domestic debt.”

The rest is external debt, he said, adding that it is estimated that the country’s public sector debt is 128 per cent of Gross Domestic Product (GDP), one of the highest for a middle-income country.

While the jury remains out on whether Chinese money is more of a boon or bane, Sri Lanka has attracted outsized attention not just from China, but also from India and the United States, given its strategic location in the Indian Ocean.

In response to whether Sri Lanka appears to be caught up in a big power play, Mr Sabry said that the country stands in the middle and does not take sides.

“We don’t want tension with anyone. We will not allow anyone to use our backyard to threaten any other country or to build their military bases, that’s for sure. But we have a strategic relationship with all of them,” he said.