- Fresh concessionary long- term loan of $ 1 b; phased out repayment of 2020 dues likely to be announced
By Nisthar Cassim
China this week will reinforce its support to Sri Lanka with its Foreign Minister Wang Yi due today in Sri Lanka in his first official overseas visit in 2020 reassuring the Government at top level meetings.
Chinese Foreign Minister Wang Yi
State Councillor and top diplomat in the global arena Wang is scheduled to meet President Gotabaya Rajapaksa, Prime Minister Mahinda Rajapaksa and Foreign Affairs Minister Dinesh Gunawardena.
His visit is the highest level interaction so far after Sri Lanka elected its new President and Government.
Chinese Embassy sources said bilateral relations including highest level exchange visits, economic cooperation under Belt and Road Initiative, Education, Security etc. are among issues that Wang and Sri Lankan leaders will discuss.
They will also talk about international issues including the UN and Human Rights and the situation in the Middle East.
The Daily FT learns that during his visit Wang is likely to announce a fresh concessionary long-term loan of $ 1 billion as well as China’s agreement to a phased-out repayment of debt owed to it in 2020.
According to the Central Bank and Ministry of Finance, by the end of 2018, the total foreign debt volume was about $ 52 billion of which only $ 6 billion is from China, making up just 11.5%.
Chinese Ambassador Cheng Xueyuan has gone on record saying that 60% of the $ 6 billion debt are preferential loans, with interest rate far lower than the market average level.
With interest rate far lower than the market average level on Chinese debt, Ambassador Cheng said in October last year, the repayment pressure for Sri Lanka is, in fact, mainly from the International Sovereign Bond issued by Western countries.
He said in many cases, Sri Lanka Government is using low interest rate loans from China to repay the ones of much higher rate from Western countries. “China is not setting up, but instead helping Sri Lanka out of ‘debt trap’,” the Ambassador said.
President Rajapaksa was earlier scheduled to visit China this week but postponed due to the arrival of several foreign officials including from Japan yesterday, and this week Russian Foreign Minister Sergey Lavrov and US Principal Deputy Assistant Secretary of State for South and Central Asian Affairs top US diplomat Alice G. Wells.
Chinese Ambassador Cheng has said loans from China are mostly used on ports, roads, and water conservancy projects that matter to people’s livelihood, meeting the desperate need of Sri Lanka’s socioeconomic development. The cooperation projects and loans from China have largely helped improve the infrastructure construction, thus promoting the economic progress, improving livelihood and providing more power for Sri Lanka’s future development.
According to him the Norochcholai Power Station is a good example. It provides nearly 50% grid electricity for Sri Lanka, helps solve the power shortage problem, ensures the stable supply of electricity and makes the average electricity price drop by 25%. Both Sri Lanka people and the nation have benefited from the power station.
China-Sri Lanka pragmatic cooperation brings huge employment opportunities but not the opposite. It also helps train skilled youths that Sri Lanka needs the most in the future.
According to incomplete statistics, the bilateral cooperation has created over 100,000 employment opportunities and helped train over 10,000 technical and management talents, laying a solid “soft power” foundation for Sri Lanka’s own development.
The China State Construction Engineering Corporation Limited (CSCEC) directly employs more than 30 Sri Lankan managers and more than 2,000 workers. In Hambantota, CSCEC also built a safety training and vocational centre for local residents. The centre covers an area of 2,000 sqm and has 12 safety excise projects and six vocational training programs, enabling many local residents pass the training and assessment, and obtain a vocational skills certificate.
In the years to come, the Port City Colombo will create another 83,000 jobs for Sri Lanka.