Treasury resumes responsibility for project-related debt owed to China Exim Bank

The project financing obtained from the Exim Bank of China is to be reclassified as central government debt yet again, as the government looks to strengthen the balance sheets of several state-owned enterprises (SOEs). 

“As a part of strengthening the balance sheets of selected SOEs, the loans from China Exim Bank to the government, which had earlier reclassified as debts of the CEB, SLPA and AASL, will be recognised as central government debt by the end of December 2022,” President Ranil Wickremesinghe announced yesterday.

The central government originally borrowed from the Exim Bank of China to fund several big-ticket projects, including Norochcholai Coal Power Plant, Hambantota Port and Mattala International Airport, during the Mahinda Rajapasksa regime. 

However, these loans were later transferred to the CEB, SLPA and AASL, with a view to reduce the central government debt burden.

Meanwhile, Wickremesinghe also announced that the guaranteed forex debt of Ceylon Petroleum Corporation (CPC) would also be treated as central government debt from the end of this year.  CPC’s forex debt also includes around US $ 2 billion foreign currency loans taken from two state-owned banks.
As at end-June this year, the overall foreign debt of SOEs stood at US $ 5.5 billion.