China tops list of bilateral financiers of Sri Lanka in 2018
Official data in Sri Lanka has reportedly recorded that China had committed the most bilateral financing to Sri Lanka in 2018, with a billion US dollar syndicated loan for discretionary deficit financing, while other lenders are leading in project loans.
In addition to the US$ 1 billion syndicated loan, which was disbursed during 2018, Sri Lanka has signed project financing worth US$ 1.13 billion in the first 11 months of 2018, the local media has reported quoting official data.
In 2018, the Central Bank of Sri Lanka had triggered monetary instability by cutting rates with printed money just as the economy recovered, generating foreign exchange shortages and capital flight, driving the country into the brink of default.
The US$ 1 billion loan, which has to be repaid in eight years with an interest below commercial rates, was used for untied budget financing, including loan repayments.
The Asian Development Bank (ADB) had committed to give the largest loans worth US$ 438 million, followed by the World Bank with US$ 104 million.
China will give US$ 85 million for road development.
Data showed that US$ 72.5 million were in the form of grants.
OSL take:
Official records of financers of Sri Lanka in 2018 indicates the level of funding that has reached the island nation for the strengthening of its economy as well as to its development programme. The record of China being the leading bilateral financier of Sri Lanka notes the importance laid by China on uplifting and developing Sri Lanka. Hence, foreign businesses interested in doing business with China could explore the possibility of setting up business in Sri Lanka to venture in to the Chinese economy. Given the strong ties between Sri Lanka and China, Chinese businesses/investors could confidently explore business/investment opportunities in the island nation. Also, the funds committed by multilateral agencies to Sri Lanka indicate fund availability for projects in the country.
| Article Code : | VBS/AT/21302019/Z_2 |