Monday, 12 April 2021 22:48

Sri Lanka extends begging bowl to China for US $500 million

In the wake of plummeting Forex reserves to new low since 2008/2009 Sri Lanka has signed an agreement to obtain a 500 million US dollar loan from China Development Bank, Treasury official said.

The 500 million dollars would be disbursed in April itself.The loan will have a repayment period of 10 years.

A previous 500 million dollar loan from CDB was for 8 years.The loans would be on favourable terms, he added.

The US$1.2 billion loan facility has been negotiated with the CDB as Sri Lanka’s Forex reserves dropped to 4.05 billion dollars in March 2020, the lowest since a currency crisis in 2008/2009.

The April tranche is the second 500 million dollars of a 1.2 billion dollar facility Sri Lanka has been seeking from CDB. A 200 million dollar equivalent Renminbi facility is also expected.

Sri Lanka has about US$3.5 billion US dollars of foreign currency denominated debt to repay from March to December 2021, and the balance is owned by resident holders, officials said.

Sri Lanka began the year with about $ 6.8 billion US of forex denominated debt due in 2021 of which about$ 2.5 billion were domestically owned, they added.

These include Sri Lanka Development Bonds and loans taken from the foreign currency banking units of domestic banks, they claimed.

 

 

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