The Government of Sri Lanka has signed a loan agreement of USD 500 million with the China Development Bank (CDB).
The Ministry of Finance stated that the relevant funds will be disbursed within this week.
Ambassador Dr. Palitha Kohona, on behalf of the government of Sri Lanka, signed the loan agreement with the China Development Bank at the Sri Lankan Embassy in Beijing on Monday (12).
“This loan will infuse vitally required foreign exchange into the Sri Lanka economy. These funds will help with Government efforts to facilitate rapid economic recovery following the setbacks caused by the Covid-19 pandemic,†the embassy said.
After the signature ceremony, Dr. Kohona stated that the timely assistance from China in providing these funds will help fuel Sri Lanka’s recovery efforts and stimulate growth.
Dr. Kohona further opined that this USD 500 million loan will encourage investor confidence in Sri Lanka and strengthen the currency.
“China, as a loyal friend and reflecting the depth of our friendship, has been generously extending its helping hand to Sri Lanka when difficult challenges confronted us. Two weeks ago, China’s gift of 600,000 Covid-19 vaccines were airfreighted to Sri Lanka adding to our vaccine stock.â€
He welcomed further cooperation on trade, investment, tourism, education, sports and other areas. “We expect more Chinese tourists to visit Sri Lanka in the post Covid-19 period with the prospect of travel restrictions being relaxed in the near futureâ€.
Dr. Kohona also said that they were in discussion with Chinese producers with a view to shooting a tourism-oriented movie in the near future.
The Mission was also holding talks to improve access to Sri Lankan exports to the lucrative market while encouraging increased FDI flows to Sri Lanka.
All these would assist our economy to recover in the shortest period, Dr. Kohona stated. This USD 500 million loan was a part of USD 1 billion, out of which USD 500 million was released last year.
Previously, the Mission had worked closely with Chinese counterparts to secure these funds, the statement said.
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Sri Lanka’s recent dealings with China offer a cautionary tale for many countries. The way Sri Lanka has ceded control of the strategic port of Hambantota highlights the issue of ‘debt-trap diplomacy’. It poses the question of whether developing countries are naively mortgaging their resources and strategic assets to China. Given Sri Lanka's huge reliance on China as a source of funding, there is concern that Sri Lanka has unwittingly become pawns in China’s global strategic agenda.