Sri Lanka is seeking cheaper funding sources to replace its debt of billions with Chinese banks, reports Reuters.

Maithripala Sirisena’s new government is currently engaged in talks planning to replace 70 percent of its $5 billion debt with cheaper loans, unnamed finance ministry officials have said.

The Chinese embassy in Colombo said it was unaware of the government’s move to replace loans, adding that current loan terms between China and Sri Lanka were unnegotiable.

The National Freedom Front's Wimal Weerawansa said at the UPFA's inaugural campaign rally that youngsters "deployed" by the current government to "discredit" former president Mahinda Rajapaksa should have boiling hot water thrown on them.

Speaking at the rally in Anuradhapura, ahead of Rajapaksa, the former minister said foreign minister Mangala Samaraweera had recruited 5,000 youngster's to attack the opposition.

The Reserve Bank of India today signed a “Special Currency Swap Agreement” with the Central Bank of Sri Lanka. The deal allows Sri Lanka to withdraw up to $1.1 billion for a maximum period of six months.

The new agreement is in addition to the existing Framework on Currency Swap Arrangement for members of the SAARC regional bloc.

In March the RBI signed a currency swap agreement with Sri Lanka, worth $400mn and valid for three years.

The swap arrangements are intended to provide a backstop line of funding for countries that are part of the South Asian Association for Regional Cooperation (SAARC) to meet any balance of payments and liquidity crises till long-term arrangements are made.

The Asian Development Bank says private investors are reluctant to make new investments due to the continuing political uncertainty in Sri Lanka.

In its annual Asian Development Outlook report, the ADB said, “political transition in Sri Lanka causes private investors to take a wait-and-see approach to new investment”.

The report says that forecasted GDP growth in Sri Lanka has been retained at 7% for 2015 and 7.3% for 2016.

Britain’s Foreign and Commonwealth Office (FCO,) in their annual corporate report on Sri Lanka, noted that “some concerns” remained despite a number of positive steps in undertaking legal reforms by the new government.

Citing local contacts in the North-East, the FCO report highlighted issues of land grab and militarisation, stating,

The General Secretary of the United People’s Freedom Alliance (UPFA,) Susil Premajayanatha said that Maithripala Sirisena would not be able to stop a majority party decision to appoint Mahinda Rajapaksa as prime minister.

Responding to a statement by Sri Lanka’s president that pledged to not allow Mahinda Rajapaksa to become prime minister,