(AFP) Sri Lanka\u2019s central bank on Friday announced it had secured a $1 billion Chinese loan as the island, a key link in Beijing\u2019s ambitious Belt and Road initiative, develops closer relations with Asia\u2019s largest economy.<\/p>\n
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.<\/p>\n
“During consultations (with the Chinese over the loan) it was clear that they see us as a key strategic partner as far as the B and R (Belt and Road) initiative is concerned, given our location,” Coomaraswamy told reporters in Colombo.<\/p>\n
The eight-year loan by China Development Bank carries a 5.25 percent interest rate with a three year grace period.<\/p>\n
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\u2019s domestic financial market by issuing “Panda bonds”.<\/p>\n
Last month, China vowed to keep providing financial help, including loans, to Sri Lanka despite warnings about the island nation\u2019s mounting debt.<\/p>\n
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.<\/p>\n
The port in Colombo straddles the world\u2019s busiest east-west shipping route and also gives a strategic foothold to China in a region long dominated by India.<\/p>\n
China had said its loan portfolio in Sri Lanka was $5.5 billion as of last month, just over a tenth of Colombo\u2019s total $51.82 billion external debt.<\/p>\n
“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.<\/p>\n
China\u2019s 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.<\/p>\n
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.<\/p>\n
Sri Lanka\u2019s economy has been on the mend since the IMF bailout, but growth in 2017 at 3.1 percent was the slowest in 16 years.<\/p>\n
The central bank had forecast 2018 growth at between 4.0 to 4.5 percent, but Coomaraswamy on Friday revised his estimate for the\u00a0calendar year to below 4.0 percent.<\/p>\n
Courtesy: The Island<\/p>\n","protected":false},"excerpt":{"rendered":"
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