Challenges Faced by Mattala Rajapaksa International Airport
The transfer of management for Mattala Rajapaksa International Airport to foreign companies sheds light on Sri Lanka’s efforts to address financial challenges.
Background
In 2017, Sri Lanka handed over the Hambantota Port to a Chinese state-owned company on a 99-year lease due to difficulties in repaying loans, raising concerns about China’s influence in the region.
New Management Announcement
The Sri Lankan cabinet has announced the transfer of airport management to two foreign companies, including one from India, to mitigate losses incurred by state-owned enterprises.
Financial Restructuring
The airport, funded by China EXIM Bank, has faced operational challenges since its establishment in 2013. The new management, Shaurya Aeronautics (Pvt) Ltd of India and Airports of Regions Management Company of Russia, will oversee operations for 30 years.
Debt Issues
To address mounting debt, Sri Lanka is in discussions with China EXIM Bank to restructure the airport loan. The country’s default on foreign debt in May 2022 led to a severe financial crisis, partially alleviated by a $2.9 billion IMF bailout.
Lease Agreement
Government spokesperson Bandula Gunawardana confirmed the lease agreement, highlighting the limited interest in managing the airport due to its location and operational challenges.
Privatization Trend
Sri Lanka’s decision to lease the airport aligns with its strategy of privatizing state-owned enterprises to ease financial burdens.
Implications of Hambantota Port Handover
The transfer of the Hambantota Port to a Chinese company in 2017 raised concerns about China’s influence in the region and its use of debt to control strategic assets.
