China mulls $2.5 bn financial aid to Lanka

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China announced Sri Lankan government’s request for financial support in the backdrop of last Thursday’s Sri Lanka signing of $1 billion credit line with India…reports Asian Lite News

 Days after India announced a $1 billion line of credit to financially strapped Sri Lanka, China on Monday said that Beijing is studying Colombo’s request for a $2.5 billion financial assistance.

Chinese Ambassador to Sri Lanka, Qi Zhenhong said new request for $1 billion financing facility and $1.5 billion buyer’s credit were raised by Sri Lankan government to Chinese government recently.

“China understands the urgent need of Sri Lanka and its people. Relevant authorities in China are promptly studying the request,” the Ambassador said at a media briefing in Colombo.

China announced Sri Lankan government’s request for financial support in the backdrop of last Thursday’s Sri Lanka signing of $1 billion credit line with India in the presence of visiting Sri Lankan Finance Minister Basil Rajapaksa.

The Indian credit line was for the procurement of food, medicines and other essential items at a time when the island nation is facing worst-ever economic crisis with dollar crunch leading lack of essential items such medicine, dairy products, fuel, gas resulting complete break of transportation and long hours of daily power cuts.

Speaking to the media in Colombo, the Chinese Ambassador on Monday announced details of various financial assistance provided to Sri Lanka and said $1 billion term financing facility ($500 million on March 2020 and $500 million in April 2021) was provided by China Development Bank (CDB) to Sri Lankan Finance Ministry to support Sri Lanka fighting Covid-19 and reviving the economy.

In August 2021, $300 million term financing facility was provided by CDB and $1.5 billion bilateral currency SWAP agreement was signed between the People’s Bank of China (PBoC) and the Central Bank of Sri Lanka (CBSL) in March 2021, to stabilise the forex level of Sri Lanka, Ambassador Qi Zhenhong said.

The Beijing representative also told media that China is the biggest source of FDI for Sri Lanka with SL’s Central Bank’s annual report record by the end of 2020, the stock of China’s Foreign Direct Investment (FDI) into Sri Lanka was $2,188 million.

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