The Government of Sri Lanka is negotiating a US $ 1 billion loan from China to construct a highway linking the capital Colombo to the hilly resort city of Kandy, even as the heavily-indebted South Asian island nation makes arrangements to pay down nearly remaining US $ 5 billion in foreign loans this year, after it paid US $ 1 billion in second week of the year 2019, the international media reports outlined.
Reports quoted Finance Ministry Spokesman M.R. Hasan saying on Saturday that he’s waiting to hear whether terms of the loan for the highway project have been approved.
International reports further outlined that President Maithripala Sirisena’s Government had criticized the previous administration of strongman Mahinda Rajapaksa for leading the country into a Chinese debt trap.
“However, the Government has turned to China to help relieve economic pressures” the reports noted.
On Mid-January (15th January 2019), Sri Lanka’s Finance Minister Mangala Samaraweera officially confirmed to reporters that Sri Lanka has maintained the unblemished record of paying debts on time by re-paying the 2014 International Sovereign Bond (ISB) issuance of US$ 1 billion onetime using country’s reserves.
Sri Lanka’s foreign debt is at 77% of its GDP and the GDP in terms of US Dollars stand at around US $ 84 billion (Same figure as in 2014) after country’s currency Sri Lankan Rupee depreciated over 30% against the US $ from Rs. 133 per US $ 1 to Rs. 185 per US $ 1 from January 2015-December 2018. Sri Lanka’s accumulated foreign debt is estimated at over US $50 billion. Reports note that between 2019 and 2023, Sri Lanka has to come up with US$17 billion for foreign loans that are maturing and debt servicing.
According to reports Sri Lanka currently has repayments of nearly US $ 5 billion to date of which US $ 1.6 billion due before April 2019.
– Reporting by Devendra Francis
adaderana business