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International relations

China offers Sri Lanka a lifeline as critics question cost

Yearlong talks yield $500m loan thought to carry 'geopolitical conditions'

Signs advertise Colombo Port City: The development is said to give Beijing sweeping powers to oversee projects for the financial hub worth $1.4 billion. (Photo by Yuji Kuronuma)

COLOMBO -- China appears to be tightening its strategic grip on Sri Lanka, wooing the debt-ridden South Asian nation with a fresh $500 million loan as Colombo wrestles with a deepening economic crisis.

In March, Sri Lanka's foreign reserves dropped to $4.05 billion, their lowest in over a decade, with tourism plummeting following the onset of COVID-19. Public coffers also took a massive hit as export earnings and foreign remittances dropped drastically due to the pandemic. The dwindling foreign reserves also caused the currency to plunge to 203 Sri Lankan rupees to the dollar, a record low.

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