The United States has committed more than $500 million in financing to support the development of a deep-water shipping container terminal in the Port of Colombo, Sri Lanka’s capital, officials announced on Nov. 8.
About $553 million will go toward the terminal project at the port—the largest and busiest transshipment port in the Indian Ocean—and will “provide critical infrastructure” for the South Asian region, according to the U.S. International Development Finance Corp. (DFC).
The investment is being billed as an effort by the DFC to advance development and economic growth while strengthening the strategic positions of its partners.
Officials have said that the new terminal will “cater to growing economies in the Bay of Bengal, taking advantage of Sri Lanka’s prime position on major shipping routes and its proximity to these expanding markets.”
However, the deep-sea container terminal will also no doubt counter China’s rising influence in the Indian Ocean.
Sri Lanka, an island nation of roughly 22 million people, is located off India’s southern coast, alongside the world’s busiest shipping routes.
“Sri Lanka is one of the world’s key transit hubs, with half of all container ships transiting through its waters. DFC’s commitment of $553 million in private-sector loans for the West Container Terminal will expand its shipping capacity, creating greater prosperity for Sri Lanka—without adding to sovereign debt—while at the same time strengthening the position of our allies across the region,” Scott Nathan, CEO of the DFC, said in a statement announcing the multimillion-dollar investment.
Sri Lanka ‘Regaining Its Economic Footing’
The Port of Colombo has been operating at more than 90 percent capacity since 2021, “signaling its need for additional capacity,” officials said.The multimillion-dollar investment will also aid Sri Lanka, which has borrowed heavily from China in the wake of its worst financial crisis in more than seven decades, prompted when foreign exchange reserves dropped to record lows.
The terminal will “facilitate private-sector-led growth in Sri Lanka and attract crucial foreign exchange inflows during its economic recovery,” U.S. Ambassador to Sri Lanka Julie Chung said in a statement.
“This financing is symbolic of the United States’ long-standing commitment to the development and well-being of the people of Sri Lanka,” she said. “Sri Lanka regaining its economic footing will further our shared vision for a free and prosperous Indo-Pacific.”
As part of its financing plans, the DFC will make a direct loan to the consortium developing the terminal, which is 51 percent owned by India’s largest port operator, Adani Ports & Special Economic Zones Ltd. India’s Adani Group is controlled by Indian billionaire Gautam Adani.
The other partners are Sri Lanka’s John Keells Holdings, which has a 34 percent share in the terminal, and the Sri Lanka Ports Authority, which has a 15 percent share in the terminal, according to officials.
China’s Belt and Road Initiative Raises Concerns
The latest funding is part of more than $9.1 billion in investments the DFC committed to new projects in 2023, including supporting entrepreneurs in Nepal, improving infrastructure across Africa, and bolstering critical mineral supply chains in Mozambique, among others.It’s also part of wider investments made by the DFC, which was established five years ago in response to the Chinese Communist Party’s multibillion-dollar global infrastructure development strategy known as the Belt and Road Initiative (BRI).
Under the BRI, Beijing has invested trillions of dollars to build roads, railways, ports, and airports in multiple countries, with a focus on developing nations.
Sri Lanka’s own multibillion-dollar debts to Beijing have plagued its efforts to bolster its finances and are often cited by critics as yet further evidence that the BRI leads to “debt-trap diplomacy.”
The Chinese regime has denied those claims.
According to AidData, the United States now provides roughly $60 billion of development finance each year to low- and middle-income countries.
However, with $80 billion per year in aid and credit commitment, China remains the single biggest official source of international development finance.
The DFC noted on Nov. 7 that the latest investment in Sri Lanka will also help support local jobs in the region and provide long-term, sustained success for the Indo-Pacific.
