Sri Lanka to negotiate new loan from China

The Governor of the Central Bank Ajith Nivard Cabraal says that Sri Lanka would try to negotiate a new loan from China to cushion the effects of the country’s debt repayments to China itself.

Responding to a question from journalists at a press briefing in Colombo today (12), he said that Sri Lanka has a very good understanding with China about its debt and debt repayment as well as investments.

“In this instance the assistance that has been sought may have been connected to the debt repayments that we are having. But it is only with regard to China,” he said, adding that Sri Lanka has an understanding with China that they would assist the island nation in making the repayments in that form.

“So maybe there is a possibility that we would have a new loan coming from China in order to cushion the effects of our debt repayments to China itself. That’s something we would like to explore and maybe we would do that in the future as well.”

He said it is to cushion the debt repayments to China that Sri Lank would try to negotiate a new loan for that purpose as well as for any other purposes. “As you know China is one country that we import heavily from. China and we have a good understanding as far as imports our concerned.”

The central bank governor said that Sri Lanka is also negotiating USD 1 billion facility with India to import goods from the neighboring nation.

“India is another country that we have a lot of imports from. We are also negotiating with India to have a USD 1 billion facility with India in order to import goods from India,” Mr. Cabraal said.

It’s a kind of an arraignment that would encourage us as well as help us to make repayments to those countries and at the same time promote more trade between the two countries as well.

He said that countries normally do that in the midst of changing circumstances in the economy and that’s the type of discussion they have had with China as well as India. He said those talks are at reasonable levels of advanced negotiations and they are looking forward to seeing some breakthrough in those as well.

Pressed on the actual amount of the loan facilities, he said it will be announced in due course after the negotiations as well as discussions reach a reasonable level of fruition.