China to give US$989 million loan to Sri Lanka for major new motorway project
- Export-Import Bank of China has agreed to provide the money, the biggest loan approved by the bank for Sri Lanka
China has agreed to provide a loan of US$989 million to Sri Lanka to build an motorway that will connect the island nation’s tea-growing central region to a China-run seaport on the southern coast, the island’s finance ministry said Friday.
The Export-Import Bank of China has agreed to provide a loan covering 85 per cent of the contract price for Central Expressway Project – Section 1, whose total cost is US$1.16 billion. The loan is the single largest loan approved by the bank for Sri Lanka, according to a statement from the finance ministry.
The loan agreement was signed on Friday by finance ministry Secretary R H S Samaratunga and Cheng Xueyuan, China’s ambassador in Sri Lanka on behalf of the Export-Import Bank, at the Ministry of Finance in the capital Colombo.
The motorway will create “an uninterrupted connectivity” among Hambantota district towns with the China-run port, an airport near Colombo, and Kandy in the central region, where the famed Ceylon tea grows.
The statement said the proposed highway will improve the inter-regional connectivity and efficiency of the entire motorway network and added that it will link “several provinces and economically important ports, airports and commercial cities.”
The loan comes as Sri Lanka struggles to repay US$5.9 billion in foreign loans this year, of which 40 per cent must be paid by the end of this month. The country used its reserves to repay a US$1 billion sovereign bond loan in January.
