11 January 2021 09:18 am
China has emerged as the leading bilateral lender to Sri Lanka in the first eight months of 2020 overtaking Japan as the former helped Sri Lanka to prop up its fiscal front when COVID-19 hit the nation in mid-March.
Out of the US$ 914.4 million bilateral foreign loans granted to Sri Lanka during the eight months in 2020, China led the pack with US$ 679.4 million pushing Japan into the distant second place with US$ 115.2 million in loans.
China overtook Japan when China Development Bank released Sri Lanka a foreign currency term financing facility worth US$ 500 million.
The second tranche of that facility which amounts to US$ 700 million is due this year.
“Other than the US$ 500 million obtained as a budget support loan, the majority of the disbursements was in lieu of the projects implemented under the roads & bridges sector accounting for almost 17 percent of the total disbursements, followed by the ground transport sector at 11 percent, water supply and sanitation sector at 9 percent, and disaster management at 4 percent,” said the Ministry of Finance.
The loan accord dated March 18, 2020 was granted at a rate of LIBOR plus 2.51 percent with an upfront fee of 1.25 percent. The loan has a three-year grace period and 10-year total payment tenor since the date of signing.
France, India and the United Kingdom were placed third, fourth and the fifth with US$ 47 million, US$ 33 million and US$ 11.8 million in bilateral loans to Sri Lanka.
Total foreign financing from January through August amounted to US$ 1,352.2 million, of which only US$ 31.3 million were grants and the balance loans.
Out of the total foreign borrowings, US$ 406.5 million was multilateral borrowings, of which the World Bank led with US$ 208.6 million and Asian Development Bank with US$ 181.4 million.
By the end of August 2020, Sri Lanka had a total undisbursed balance of foreign financing available from already committed loans that are to be utilised in next 3 to 5 years amounting to US$ 8,737 million.
China accounts for the majority of the loans to be disbursed followed by Asian Development Bank, Japan and the World Bank respectively.