Sri Lanka is seeking $2.2 billion from Chinese banks, the government said Thursday, in echoes of a borrowing binge more than a decade ago that resulted in the country having to give up a strategic port to China.

Money and capital markets minister Nivard Cabraal said the government was hopeful of finalising a $1.5-billion swap facility with China's central bank.

"Within the next two weeks we should be able to finalise it," Cabraal told reporters in Colombo while maintaining that the funds would be used as a "buffer" to meet the government's foreign currency needs.

Official figures show Sri Lanka's foreign reserves plummeted to $4.8 billion at the end of January, the lowest since September 2009 when they fell to $4.2 billion.

Officials said Sri Lanka was also in talks with China Development Bank for a $700-million loan that would include the equivalent of $200 million being drawn in Chinese currency.

Under former president Mahinda Rajapaksa between 2005-15, Colombo borrowed billions from China, accumulating a mountain of debt for expensive infrastructure projects.

This sparked Western and Indian concerns that the strategically located Indian Ocean nation was falling victim to a Chinese debt trap.

Mahinda Rajapaksa returned to power as prime minister in 2019 after his brother Gotabaya Rajapaksa as elected president.

Sri Lanka was forced to hand over its strategic Hambantota port on a 99-year lease to a Chinese company in 2017 after Colombo said it was unable to service the $1.4-billion debt from Beijing used to build it.

Three top international rating agencies downgraded Sri Lanka's creditworthiness late last year after raising doubts over Colombo's ability to service its foreign debt.

The South Asian nation's economy is reeling from the twin impacts of the deadly 2019 Easter bombings that killed 279 and devastated the tourism sector as well as the fallout from the pandemic.

Cabraal insisted Thursday that Sri Lanka would maintain its record of repaying debt on time and said the credit downgrades by international agencies were "unwarranted."

He said Sri Lanka had already repaid $500 million this year out of its $3.7 billion debt servicing commitment for calendar 2021.

He said the government imposed a ban on luxury imports and several other commodities in a bid to conserve foreign exchange so that the country could have sufficient foreign currency to repay its debt.

Sri Lanka's economy contracted by a record 3.9 percent last year.

However, Cabraal said economic activity was picking up and the country estimated foreign inflows of $32 billion against outflows of $27.6 billion this year leaving a surplus of $4.4 billion.

aj/stu/mtp

BANK OF CHINA

Related Links
Learn about the Superpowers of the 21st Century at SpaceWar.com
Learn about nuclear weapons doctrine and defense at SpaceWar.com

Tweet

Thanks for being here; We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain. With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords. Our news coverage takes time and effort to publish 365 days a year. If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor $5 Billed Once credit card or paypal		SpaceDaily Monthly Supporter $5 Billed Monthly paypal only

Biden's CIA pick stresses China threat
Washington (AFP) Feb 24, 2021
Veteran US diplomat William Burns, nominated to lead the CIA, pledged Wednesday to keep the agency free of politics and said China would be his main focus if confirmed. Burns was picked by President Joe Biden to replace retiring Central Intelligence Agency Director Gina Haspel and to help restore an air of independence after former president Donald Trump allegedly tried to manipulate the country's spies for political reasons. Burns told the Senate Intelligence Committee that his career in the M ... read more