Sri Lanka is taking into consideration a $ 300 Million loan from the Bank of China, which could reach $ 1 billion in the coming months to deal with payments, Eran Wickramaratne, Deputy Finance Minister said Tuesday.
He also affirmed that the Sri Lankan talks began to bargain the value of the deal with the Indian central bank to $1 Billion from $ 400 Million which was previously negotiated.
A series of credit crunches following a political crisis has made borrowing difficult for Sri Lanka, which will receive record payments of $ 5.9 billion this year, including $ 2.6 Billion in adulthood in the first 3 Months.
The investor’s confidence suffered severely when President Maitripala Sirisena brutally dismissed President Major Ranil Wickremesinghe in October and restore him with former pro-Chinese President Mahinda Rajapaksa and suspended parliament.
The Sri Lankan Supreme Court later declared the closure of the parliament illegal and Wickremesinghe was restored in December. Later the seven-week crisis damaged the rupee and led to higher yields of government bonds and bonuses, pressuring in public finances.
By the end of 2018, almost a quarter of Sri Lanka’s total external debt was owed to China, which provided about $8 Billion for the construction of ports and highways and other major investments in planning a ‘Silk Road’ of the 21st century in countries and shipping routes.
An informed source on the Bank of China’s supply told on Tuesday that the Sri Lankan government has asked Finance Minister, Mangala Samaraweera to bargain the loan, offered to LIBOR six months plus 260 basis points. It should be repaid within three years, the source said.
The finance minister also stated that it is extremely intricate to venture the international markets owing to taut trading conditions with downgrades in the rating.