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March 25, 2019

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China lends Sri Lanka US$989m for key road link

China has agreed to provide a loan of US$989 million to Sri Lanka to build an expressway that will connect the island nation’s tea-growing central region to a China-run seaport on the southern coast, the island’s finance ministry has announced.

The Export-Import Bank of China has agreed to provide a loan covering 85 percent of the contract price for Central Expressway Project — Section 1 — the total cost of which is US$1.16 billion. The loan is the single largest loan approved by the bank for Sri Lanka, according to a statement from the finance ministry on Friday.

The expressway will create “an uninterrupted connectivity” among Hambantota district towns with the China-run port, an airport near Colombo, and Kandy the central region where the famed Ceylon tea grows.

The statement said the proposed highway will improve the inter-regional connectivity and efficiency of the entire expressway network and added that it will link “several provinces and economically important ports, airports and commercial cities.”

The loan comes as Sri Lanka struggles to repay US$5.9 billion in foreign loans this year, 40 percent of which must be paid by the end of this month. The country used its reserves to repay a US$1 billion sovereign bond loan in January.

Sri Lanka leased the Chinese-built port in Hambantota, which is near the world’s busiest east-west shipping route, to a Chinese firm in 2017 for 99 years in a bid to recover from the heavy burden of repaying a loan the country received to build the facility.

The port is part of China’s string-of-pearls plan for a line of ports from Chinese waters to the Persian Gulf.


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