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Sri Lanka Navy Journal 7

They found that only eight countries are at high risk of debt problems based on
15
an identified pipeline of project . Interestingly, despite the claim of majority
literature painting a suspicion on the Chinese intentions, these new findings
conclude that Sri Lanka is not coming under risk of debt distress when compared
with the other countries of the BRI. In fact according to a Sri Lankan government
official, Beijing is “Willing to Give” an estimated additional $ 24 billion as part of
BRI if requested. This may be due to the fact that findings were concluded post
debt for equity swap of Hambantota port. Post debt for Chinese investment of
several countries are indicated in figure 2.

Figure 2: Post Debt for Chinese Investment
Source: Center for Global Development

However, another important area that the report highlighted is the
sustainability of the debt. If infrastructure development is the decisive
requirement of growth in developing countries, then debt financing is the
driver of that process. However, unlike the public borrowing to support the
productive investment of today’s wealthy countries from their own savings, Sri
Lanka’s problem was borrowing money from outside. So, when the government
borrowings from foreign creditors not accompanied with enough revenue
generation to cater for debt, it can generate a downward spiral of which requires
debt restructuring strategy.

On the other hand, Ethiopia is a classic example opposite to Sri Lanka. Ethiopia has

15 Hurley J,(et al), Examining the Debt Implications, Center for Global Development, CGD Policy
Paper 121 March 2018.p.1.