The IMF’s decision to crack the whip on tax breaks granted by the Sri Lankan government to the Port City Colombo project is a welcome move because such non-transparent measures have largely benefited Chinese State-run firms implementing such ventures. It is also significant that IMF has nudged Sri Lanka to amend certain investment-related laws to make them more rules-based and aligned with international best practices. It should be noted that the China Harbour Engineering Company (CHEC), which is building the $1.4-billion Port City Colombo, was involved in the unsustainable development of the strategic Hambantota port, which Sri Lanka was forced to hand over to China on a 99-year lease after struggling to repay its debts to Chinese firms. Most of the projects under China’s Belt and Road Initiative (BRI) in India’s neighbourhood have come with crippling debt traps.
