SL in discussion with China Development Bank to borrow up to US$ 2bn

The government is in discussions with China Development Bank (CDB) to obtain a loan up to US$ 2 billion with a likely 10-year tenor, which could be finalised within weeks, CB Senior Deputy Governor, Dr. P. Nandalal Weerasinghe revealed. 

“That had made good progress and will materialise within few weeks. It could be US$1.3 billion; but the final number is still being worked out,” he said.

He noted that the loan would be obtained within the borrowing limits approved by Parliament in a Vote on Account up to April. IMF has forecasted Sri Lanka’s budget deficit would expand 7.9 percent of GDP from the estimated 5.3 percent in 2019 due to newly implemented tax cuts and exemptions, clearance of domestic arrears, and backloaded capital spending from 2019.
Sri Lanka’s foreign reserves have increased to US$ 7.9 billion at the end of February from US$ 7.5 billion in January.

The country has around Rs.2 trillion debt service obligations including a Rs.1.1 trillion worth foreign debt service obligation for this year, according to the Treasury. 

Dr. Weerasinghe insisted that the government has a clear financing plan for the year’s first and second half.