Sri Lanka’s Central Bank announced that it had secured a USD $1,000 million loan from the China Development Bank (CDB) on Wednesday, just days after the prime minister warned that the island’s economic crisis will worsen.
In a press release earlier today, the Central Bank of Sri Lanka said that after a “a strict evaluation and negotiation process” an offer from the CDB was accepted “arranger based on least cost and longer maturity period”.
“The interest cost is highly competitive and linked to 6 Month USD LIBOR with a grace period of three years,” said the bank.
The announcement comes just days after Ranil Wickremesinghe called on parties to “shed their political differences and support the government to overcome this crisis”, as the Sri Lankan rupee lurches lower this year.
The newly announced loan may push Colombo further into debt, reported the Economic Times earlier this year. 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.