Cash-strapped Sri Lanka eyes China development projects once again

Sri Lanka's presidential candidates pin hopes on Chinese-funded Port City project to revive economy amid financial crisis.

Sri Lanka’s economic collapse was partly blamed on struggling high-debt Chinese mega-projects, but candidates in Saturday’s presidential election are banking on at least one of them to buck the trend.

The country suffered its worst financial meltdown in 2022, when it ran out of dollars to import essentials, sparking street protests that toppled the then-president Gotabaya Rajapaksa.

When the island nation plunged into chaos, CIA chief Bill Burns blamed its economic collapse on what he called “dumb bets” on Chinese-funded projects.

Colombo has since secured a $2.9 billion IMF bailout loan, but whoever is elected will face huge loans and interest accumulated since Sri Lanka defaulted on its $46 billion external debt.

All top three candidates are hoping a Chinese-funded real estate “Port City” development will woo much-needed foreign investors.

Port City bills itself as the “gateway to South Asia”, a special economic zone with tax breaks of up to 40 years. For now, it remains largely empty.

But Revan Wickramasuriya, the chief operating officer of the Port City Economic Commission, said the authorities expect to attract $12-$15 billion in foreign direct investment to construct buildings and set up hotels, housing, and a marina.