Chinese Loans To Sri Lanka Exceed US$ 3,836 Bn

 Sunday, May 04, 2014

Total value of concessionary loans, aid, and the grants offered by China during the past four years have exceeded US$3,836 billion payable between 14 to 20 year period;subjected to different interest rates agreed between 1.53% and 6.5%.

According to the Government of Sri Lanka, the Chinese financed the key development programs here including the road construction, port construction, power generation, water supply, irrigation, other infrastructure development, and supply of equipment, machinery, and vehicles necessary for these projects.

However, this assistance was not limited to financing but it also includes Sri Lanka to provide employment opportunities for over 1,700 Chinese personnel now engaged in 42 projects throughout the island.
Most of these credit facilities came with much stiffer than employing Chinese personnel but also to buy everything from raw materials to machinery from China and also to contract the Chinese firms to execute and manage. In certain cases the sub-contractors are also from China.

Any country embarking on massive infrastructure depends on low interest rates for long repayment periods, known as the soft loans prefers the World Bank, Asian Development Bank, and similar multilateral lenders or from any other bilateral state donors.

The Chinese rates stand well above these agencies, but of course, lesser than the average commercial lending rates.

The ulterior goal of a soft loan is to complete the respective project on time and to use it for propelling the economic development in both macro and micro levels.