Sri Lanka and China Signs $308 Million Loan Agreement

Sri Lanka inked a credit arrangement with China worth 2 billion Renminbi (USD 308 million) on Tuesday to fund its COVID-19 response, economic revival, and financial stability.

The China Development Bank and the Sri Lankan government signed an RMB 2 billion (about ₹61.5 billion) Term Facility agreement in response to Sri Lanka’s request for support in its #COVID19 response, economic resurrection, financial stability, and livelihood improvement.

The latest loan is part of a previously agreed-upon USD 1.2 billion budget support in credit. In April 2021 and March 2020, Sri Lanka got a total of USD 1 billion in loan support, divided into two tranches of USD 500 million each.

The coronavirus pandemic has thrown the Sri Lankan economy, which is heavily reliant on tourism, into disarray.

Sri Lanka and India agreed to a USD 400 million currency swap facility in February to help the country get through its financial difficulties.

The government of President Gotabaya Rajapaksa has categorically denied that Beijing is attempting to entice Sri Lanka into a debt trap.

In 2017, the former Sri Lankan government, struggling to repay over USD 8 billion in Chinese loans and investments, gave over the main stake of the Chinese-built important southern port of Hambantota to a Chinese state-owned firm on a 99-year lease.

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