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Fresh Chinese loans set to plunge Sri Lanka further into debt

Sri Lanka is preparing to accept further Chinese loans later this year, which may push Colombo further into debt reports the Economic Times.

The ET reports that the Central Bank of Sri Lanka is currently working with the People's Bank of China, to issue the equivalent of $250 million worth of yuan-denominated Panda bonds by the final quarter of 2018. The fresh loan will add to the recently secured a $1 billion syndicated loan from China Development Bank.

With China charging interest rates of 6.3% for loans to Sri Lanka, compared to the reported 0.25–3% for other lenders such as the World Bank or the 1% and less charged by India’s Line of Credit to neighbouring countries, Colombo is set to plunge deeper into debt.

Currently Sri Lanka’s accumulated foreign debt is estimated to stand at $55 billion, with Colombo having to muster up garner $17 billion for foreign loans maturing and debt servicing between 2019 and 2023.

Sri Lanka’s debt also currently stands at 77% of its GDP with foreign reserves at $8.5 billion, an inadequate sum according to analysts

Read more from the Economic Times here.




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