China’s EXIM Bank to resume loans to Sri Lanka

Colombo, Aug 7 (PTI) China’s EXIM Bank is set to disburse a fresh loan to Sri Lanka, President Anura Kumara Dissanayake told Parliament here on Thursday.
     He said the Export-Import Bank of China (EXIM) had agreed to provide a yuan loan under concessionary terms which would be disbursed for the purpose of recommencing the construction of Sri Lanka central highway.
     Dissanayake added that his cabinet would approve the move at next week’s meeting.
     If finalised, it will be the first Chinese EXIM bank loan to Sri Lanka since the island nation suffered its economic bankruptcy in 2022, and also the first since the International Monetary Fund (IMF) triggered debt restructuring for debt sustainability under the USD 2.9 billion four-year bailout.
     In November 2024 when Sri Lanka finalised its debt restructuring process, Sri Lanka owed China, the single largest bilateral creditor, USD 4.7 billion, about 4 billion of which was to EXIM Bank.
     Speaking on the proposed highway construction, Dissanayake said the work came to a halt following bankruptcy.
     “Our agreement is with the Chinese firm and due to the halt of the project, their equipment came to be destroyed,” he said.
     The Chinese firm had asked for compensation. “We can’t agree to pay compensation overnight,” Dissanayake said.
     The president said the previous EXIM bank loan on the project was not sufficient and a higher amount is anticipated.
     “We are happy to announce that China’s EXIM Bank has agreed to provide a loan in yuan with many concessions. Once we get the loan, we can settle the contractor’s compensation and recommence the project,” he said.

(This story has not been edited by THE WEEK and is auto-generated from PTI)