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China lends Sri Lanka $290m for development

[TamilNet, Wednesday, 10 March 2010 18:09 No Comment]

China has completed arrangements through its funding arm, Exim Bank, to provide $290m in concessionary development loans to Sri Lanka, Reuters reported. $190m of the loan is to develop a second airport in Matara and the other $100m is to improve the railways. China was the largest foreign funding source for Sri Lanka in 2009 with $1.2 billion followed by the Asian Development Bank with $424 million, according to the same report. The 2009 funds were allocated to build roads, coal power project in the Eastern province, and a port in Sri Lanka’s President’s electorate in Hambantota.

"[T]he two Concessional Loan agreements were signed during a three day visit by P. B. Jayasundera, Secretary to the Ministry of Finance of Sri Lanka and a delegation from the External Resources Department and Attorney General’s Department to Beijing from March 3 to 5, according to Indian media.

"To offset the economic losses on account of the strained ties with the allies in the West, President Mahinda Rajapaksa has deepened ties with Japan, India, China and Myanmar, as well as Iran, Indian daily Hindu said. “The government of China, Asian Development Bank and the World Bank were the three main donors who accounted for 1.9 billion dollars or 84.3 percent of the total commitment in 2009,” the Sri Lanka Finance Ministry report had said. Japan and the Manila-based Asian Development Bank have in the past been the biggest lenders to the island, according to the Hindu.

With strained economic relations with the West on the war-crime allegations, Colombo has been openly depending on China and other countries for financial assistance. Recently European Union moved to terminate the GSP+ concessions that Sri Lanka enjoyed in the past several years to consolidate Sri Lanka’s position as an apparel manufacturer.

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