ZCZC
BCN-15
SRILANKA-CHINA-ECONOMY-DEBT
Sri Lanka secures $1 billion Chinese loan
COLOMBO, Aug 4, 2018 (BSS/AFP) – Sri Lanka’s central bank on Friday
announced it had secured a $1 billion Chinese loan as the island, a key link
in Beijing’s ambitious Belt and Road initiative, develops closer relations
with Asia’s largest economy.
Central bank Governor Indrajit Coomaraswamy said that first half of the
loan will be released later this month and the balance will be received in
October.
“During consultations (with the Chinese over the loan) it was clear that
they see us as a key strategic partner as far as the (Belt and Road)
initiative is concerned, given our location,” Coomaraswamy told reporters in
Colombo.
The eight-year loan by China Development Bank carries a 5.25 percent
interest rate with a three year grace period.
Coomaraswamy said that the terms of Chinese loan were better than other
international lenders and the country hopes to secure additional $200 to $250
million from China’s domestic financial market by issuing “Panda bonds”.
Last month, China vowed to keep providing financial help, including loans,
to Sri Lanka despite warnings about the island nation’s mounting debt.
Sri Lanka last year granted a 99-year lease on a strategic port to Beijing
over its inability to repay Chinese loans for the $1.4 billion project.
The port in Colombo straddles the world’s busiest east-west shipping route
and also gives a strategic foothold to China in a region long dominated by
India.
China had said its loan portfolio in Sri Lanka was $5.5 billion as of last
month, just over a tenth of Colombo’s total $51.82 billion external debt.
“China will continue to provide selfless support, including much-needed
funds for the development of Sri Lanka,” the Chinese embassy in Colombo said
last month.
China’s Belt and Road infrastructure project seeks to revive ancient trade
routes through a massive rail and maritime network via $1 trillion in
investments across Asia and Europe.
The International Monetary Fund, which bailed out Sri Lanka in June 2016
with a $1.5 billion staggered loan, has warned that Colombo over its heavy
debt.
Sri Lanka’s economy has been on the mend since the IMF bailout, but growth
in 2017 at 3.1 percent was the slowest in 16 years.
The central bank had forecast 2018 growth at between 4.0 to 4.5 percent,
but Coomaraswamy on Friday revised his estimate for the calendar year to
below 4.0 percent.
BSS/AFP/HR/1030