Japan lends $428 mn to Lanka’s development, disaster prevention

Japan will provide a 41.1 billion Japanese Yen ($427.59 million)loan to Sri Lanka for infrastructure development and disaster prevention, the island nation’s government said on Thursday.

The loan along with another 2.7 billion yen ($28.09 million) grant aid was pledged as Sri Lankan President Mahinda Rajapaksa and Japanese Prime Minister Shinzo Abe held discussions in Tokyo, Rajapaksa’s Colombo office said in a statement.

It did not elaborate on the loan terms. The Japanese loan comes a day after Moody’s Investors Service said Sri Lanka’s economy was facing elevated external pressure in the year ahead and the debt burden will remain high although the government will likely continue to make gradual progress in reducing its deficit.

Sri Lanka is in need of foreign funds and loans to finance the country’s ambitious post-war infrastructure projects this year after it failed to secure a two-year budget financing loan from the International Monetary Fund.

The IMF, which completed the disbursement of a $2.6 billion loan in July, Sri Lanka is in no need to access it for budget financing as the $59 billion economy has developed wellestablished access to international capital markets.

Sri Lanka has increasingly been relying on commercial loans from China since the end of a three-decade war in May 2009, which has stoked concern in neighbouring India.

Sri Lankan President Rajapaksa has been pushing for development of infrastructure projects specially in his native south and electoral constituency of Hambantota, where he will launch a $209 airport on Monday built with a Chinese loan following a $1.5 billion sea port, also funded by China.