The US Acting Assistant Secretary of State, Alice Wells this week expressed concerned over Sri Lanka's "unsustainable debt burden" from China's non-concessional loans.
"China is providing non-concessional loans that promote unsustainable debt burdens, which I think are increasingly now of concern to the Sri Lankan people in the government," Ms Wells said.
"In Sri Lanka, we're the largest grant provider of assistance. China is providing non-concessional loans that promote unsustainable debt burdens, which I think are increasingly now of concern to the Sri Lankan people in the government. But what we bring to our relationship are multiple tools," she added.
Sri Lanka’s public debt is expected to rise to 85% of Gross Domestic Product (GDP) with the current account deficit widening to 2.5% of GDP the International Monetary Fund warned last month.
In July, Moody's Investors Service urged the Sri Lankan government to improve its tax efficiency in order to increase the tax revenue/ GDP ratio, and work to resolve the high general government debt, very low debt affordability and large borrowing requirements.
Pledging to rid the country of debt by 2020, the prime minister Ranil Wickremesinghe said last month, "the country still has no strength to repay the loans in time but a good program has been initiated and it is succeeding not because of government's economic management but because of the good relationships president Maithripala Sirisena's government maintains with the international community."
