The foreign debt troubles of Sri Lanka is perhaps the most discussed topic of this year. By the end of April 2021, the total outstanding external debt of the Government was USD 35.1 billion, and that amount has only grown as we're passing the first week of November. In this article, we're summarizing some of the loans that Sri Lanka has obtained during 2021.
- On the 26th of February, China’s Asian Infrastructure and Investment Bank issued a media release stating that they have granted a 180 million USD loan to Sri Lanka. This loan application was submitted in 2019 and approved in 2021. It was disbursed through the Bank of Ceylon (90 million USD) and People's Bank (90 million USD) for the COVID-19 emergency and crisis response.
- Sri Lanka signed a loan agreement for 500 million USD with the China Development Bank on the 12th of April 2021. In fact, it was a part of the 1 billion USD, out of which 500 million USD was released in 2020. This loan was supposed to address the foreign currency crisis in Sri Lanka, by infusing foreign currency into the country's economy, while elevating the economic recovery following the setbacks caused by the COVID-19 pandemic.
- Another loan agreement was signed by Sri Lanka in April. The government of Sri Lanka and the World Bank signed this loan agreement in the amount of 69.33 million USD for the Kandy Multimodal Transport Terminal Development Project. It intends to develop the Good Shed terminal in Kandy.
- In May 2021 Sri Lanka signed a concessional loan of 500 million USD with Korea’s Exim Bank. It aims to further enhance the economic cooperation between Sri Lanka and the Republic of Korea. The loan interest rate on this concessional loan is about 0.15% -0.20%, and it has a repayment period of 40 years with a grace period of 10 years.
- The World Bank approved a loan of 500 million USD in October 2021, with the intention of financing for the development of rural road networks and related agricultural services in Sri Lanka, through the Inclusive Connectivity and Development Project. It's expected to benefit around 16 million people living in rural communities in selected districts of Sri Lanka.
- The 110 million USD ADB loan and 3 million USD grant agreements were signed in October 2021. It was provided by the ADB-managed Japanese Fund for Poverty Reduction (JFPR), to implement the “Additional Financing of Health Systems Enhancement Project.”
- Sri Lanka obtained a 13 million Euro loan from the German KfW bank in November and pledged to convert that amount into a Grant to complete the construction of the New Maternity Hospital (Teaching) in Galle.
- The International Bank for Reconstruction and Development has agreed to provide 500 million USD for the Inclusive Connectivity and Development Project (ICDP). This project aims to improve 3000 km of growing proportion of the provincial and rural road network that is in poor condition. Sri Lanka entered into this loan agreement with the IBRD in November.