Sri Lanka considers big China loan to repay foreign debts

Vastavam web: Sri Lanka is considering a USD 300 million loan offer from the Bank of China as it prepares to repay foreign debts this year, a Finance Ministry official said. The government has appointed a three-member committee to negotiate the deal, according to Finance Ministry spokesman M R Hasan. The loan is repayable in three years, he said Wednesday.

Sri Lanka must repay USD 5.9 billion in foreign loans this year, of which 40 per cent needs to be serviced during the first three months. It paid back USD 1 billion this week. It has invested USD 1.5 billion in a port city being built on reclaimed land off the island’s west coast. President Maithripala Sirisena’s government had criticised the previous administration for leading the country into a Chinese debt trap by allowing unsolicited projects at high commercial interest rates. However, it has retracted its opposition to Chinese projects owing to economic pressures.