Debt due to Chinese banks

The Sri Lanka Government is grappling to service loans taken from major Chinese banks amidst the dwindling foreign reserves and US dollar crisis.

As Sri Lanka is entangled in a foreign exchange crunch, at least two key banks in China have been pressurising the Treasury demanding the repayment of loan installments this month without delay, reliable official sources divulged.

China Development Bank and China Exim Bank have been ignoring the request made by the government to restructure their loans and delay the recovery of loan installments due to be paid as soon as possible, a senior Finance Ministry said.

Sri Lanka owes debt payments to China in the region of US$ 1.5 to 2 billion this year. China’s accumulated loans in Sri Lanka were estimated to be more than $4.5 billion in the last few years, Finance Ministry data showed.

The country has to repay instalments of $53.596 million to China Development Bank, $17 million to China Exim Bank and another sum of 386.19 million yuan by the Water Board of Sri Lanka to the Exim Bank by Friday March 18 deadline.

While requesting the banks to restructure loans, the Government has brought to the notice of Chinese authorities that it is difficult to repay these loan installments. But the Bank of China has demanded the Treasury to repay the loan installment otherwise it has to repay the full amount within three days (on Monday 21) as per the agreement.