Last Updated : 2019-08-21 09:09:00

Bank of China offers Sri Lanka US$300m loan

16 January 2019 10:55 am - 4     - {{hitsCtrl.values.hits}}

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Sri Lanka is considering an offer from Bank of China for a loan of US$300 million, which could be raised to US$1 billion, to help it meet repayments during coming months, two sources in Colombo with knowledge of the offer told Reuters on Tuesday.

A series of credit rating downgrades and a political crisis have made it harder for Sri Lanka to borrow as it faces record high repayments of US$5.9 billion this year, US$2.6 billion of which fall due in the first three months.

"The risk premium has gone up after the recent political crisis and the borrowing cost is expensive after the rating cuts. This loan will be used to repay some loan repayments in the first quarter," one source said.

As of the end of 2018, nearly a quarter of Sri Lanka's total foreign debt was owed to China, which has lent some US$8 billion while building ports, highways and planning other major investments in the island state.

There was no immediate comment from Sri Lanka's Finance Ministry, which is on holiday for a local festival, and calls to the Bank of China in Colombo were also unanswered.

But a second source said Sri Lanka's Cabinet had already asked Finance Minister Mangala Samaraweera to negotiate the loan, which has been offered at six-month Libor plus 260 basis points. It has to be repaid within three years, the source added.

The six-month Libor was at 2.865 on Tuesday. (Reuters)

  Comments - 4

  • Sisira Weragoda Wednesday, 16 January 2019 03:09 PM

    According to The code of practice of the display of National flag (Home Ministry circular 1987), the display of it in this news item is incorrect. National media shall know this simple procedures and take more care in matters of this nature

    Karuna Wednesday, 16 January 2019 04:21 PM

    China gives a loan to pay Sri Lanka debt to china, what an interest cycle.

    Sambo Thursday, 17 January 2019 08:44 AM

    At what interest rate and what else will they want to have.

    cheers Thursday, 17 January 2019 09:02 AM

    Yahapalanaya came in to power which includes JVP not to follow any Chinese loans or developments as Rajapakse used. Now what is this call and where are the culprits who shouted before like Ranil, Champika, Arjuna, Anura who pays this loan your family?


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