Sri Lanka’s foreign debt – 81% debt held by West & Allies not China



Much hype and propaganda has fooled the world & Sri Lankans into believing China has trapped Sri Lanka in debt. For every woe Sri Lanka suffers the credit is put on China. This has been the fashionable sing-song-of Colombo cocktail circles who want to dictate how the entirety of Sri Lanka think. Sri Lanka’s economic woes have naturally being pinned on China. The ugly truth is that Sri Lanka’s foreign debt is owed to the West & not China. Holding 81% of Sri Lanka foreign debt the West & its allies are breathing down Sri Lanka. It is not China but West & allies who have trapped Sri Lanka in debt. Over $50billion of Sri Lanka’s $54billion debt is not held with China but West & their allies.


IMF Genie

81% of Sri Lanka’s debt is held by US & European financial institutions together with their Asian allies Japan & India. (source Ben Norton)


Sri Lanka has gone to IMF 16 times & faced structural adjustments – has structural adjustments done Sri Lanka any good?


Against 81% Sri Lanka’s debt held by West & its allies – Sri Lanka’s debt to China is just 10%.

Advocata claims China holds $3.5b of the $54b debt Sri Lanka owes foreigners.

This means over $50billion Sri Lanka’s debt is not owed to China.


47% of this 81% foreign debt is held by Western funds & banks.

Topping this list holding international sovereign bonds are:


  • Allianz (Germany)
  • Amundi Asset Management
  • Ashmore Group (Britain)
  • BlackRock – in 2009 acquired Barclays Global Investors (BGI)
  • Fidelity Investments- US retirement system
  • Hamilton Reserve Bank – holds $250m of Sri Lanka’s 5.875% bond due on 25 July 2022. They filed a legal suit in New York.
  • HBK Capital Management
  • HSBC (Britain)
  • JPMorgan Chase – US retirement system
  • Lord Abbett – US retirement system
  • Morgan Stanley Investment Management
  • Neuberger Berman – US retirement system
  • Pacific Investment Management
  • PIMCO – US retirement system
  • Prudential (U.S.)
  • Saint Kitts & Nevis accused Sri Lanka of excluding certain bondholders from restructuring accusing hanky panky by officials handling restructuring.
  • Rowe Price Associates Inc – US retirement system
  • UBS (Switzerland)



Sri Lanka’s defaulting is causing US retirees suffering from massive losses upto 80% of their original investment value was the argument raised by Hamilton Reserve Bank who took Sri Lanka to courts. Inspite of defaulting repaying on China’s loan of $78m due in July, China’s Exim Bank has not taken Sri Lanka to court.


$12.5billion international sovereign bonds were issued by Sri Lanka on the advice of then governor CBSL Indraji Coomaraswamy. This was taken far before covid 19 impacted Sri Lanka in March 2020. Sri Lanka’s current CBSL head & then Finance Minister Sabry decided to default claiming Sri Lanka was ‘bankrupt’ in April 2022. The above 3 have much to answer for. Taking sovereign bonds and boldly defaulting obviously had not taken stock of how Sri Lanka was to make repayment or the repercussions of declaring Sri Lanka would not repay. Did it not occur to them that their big talk would land the nation in legal issues?


Sri Lanka has hired financial & legal advisers Lazard & Clifford Chance to renegotiate with creditors which include 30 asset managers and bilateral lending from Japan, India & China.

How much is Sri Lanka paying Lazard & Clifford Chance for their advice?


Lazard & Clifford Chance will be up against White & Case LLC the legal advisor and Rothschild & Co as financial advisers for the more than 30 asset managers that hold Sri Lanka’s international bonds.


ADB owns 13% of Sri Lanka’s foreign debt

World Bank owns 9% of Sri Lanka’s foreign debt


Both ADB and World Bank are US dominated with veto power.

Japan owns 10% of Sri Lanka’s foreign debt while Japan exerts influence over ADB.

2% of Sri Lanka’s foreign debt is owed to India though with the current handouts by India, the % would have increased.


The West & its alliances not only yield monetary control over Sri Lanka but its formation of Quad & anti-China military alliance places Sri Lanka to walk on a tight-rope with tremendous pressure using the 81% debt reality.


When they give – they give with undisclosed & disclosed expectations.

Thus, the West & its allies is using this 81% to exert tremendous pressure on Sri Lanka.


In 2015 US-India installed a puppet regime to power.

By end of 2019 – less than 5% of Sri Lanka’s foreign debt was held by China. 64.6% was in dollars, 14.4% in IMF SDR & 10% Japanese yen.


Given that China is well accustomed to the lies and distortions of western media & can afford to ignore, can Sri Lanka do the same?


Was this 81% foreign debt a malady of the neoliberal policies & associated ills Sri Lanka had to suffer forcing Sri Lanka to be trapped to West?

Was the sudden decision to default on debt primarily without repaying a debt due to China, part of a larger plan to put Sri Lanka further into West-Allies debt?

If IMF bail outs have not succeeded 16 times earlier – how far is the 17th IMF bail out likely to succeed?


How did west & its allies get away by spreading false propaganda. Where were the so-called Sri Lankan economists to set the story straight. Surely, they had all the numbers and should have told the general public the true picture.


It is not only the ‘economic experts’ who are guilty of spreading lies & distortions taking the West-Allies, anti-China stand but the local and international media are equally guilty.


Wall Street Journal “China’s lending comes under fire as Sri Lankan debt crisis deepens”


Voice of America “China’s Global Image under Strain as Sri Lanka faces debt trap’ accused China of following a debt-trap diplomacy to weaken countries to make them dependent on China.


Associated Press ABC News, Al Arabiya, Al Jazeera too carried the anti-China tempo.


India Today, The Print, Wion, New Indian Express, Business Standard too echoed anti-China rhetoric attributing Sri Lanka’s economic situation to China.


Numerous think tanks across US also carried the same version as did UK & EU news agencies.


Sri Lanka is not in debt to China  

China has not seized assets of Sri Lanka and globally there are close to 20 cases where China has helped countries out of economic crisis instead of asset seizures. China has not taken Sri Lanka to courts either. The differing aspect of West & China’s loans is the manner it looks at how a project can contribute to the future.


In fact China has cancelled more than $3.4billion & restructured $15billion of Africa’s debt. At no time has China exerted pressure on countries in debt.


China has shown by its 30 year development plan how to bring a nation in poverty to become a nation challenging Western hegemony. Over the past 40 years China has taken 800million out of poverty while 37.2million Americans (11.4%) are living in poverty. If Sri Lanka should be seeking advice, it is from China on how to restructure state enterprises given that China has shown how to turn a poverty-stricken China to become where it is today. Sri Lanka has to seriously look away from returning to neoliberal privatization failed models.




Shenali D Waduge

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