March 10, 2010 (Gulf News) - China, through its funding arm the Exim Bank, has concluded with Sri Lanka a Concessional Funding arrangement to construct the island nation’s second airport in Mattala at a cost of US $ 190 million while also pledging Concessional financing of US $ 100 million to augment the capacity of the Sri Lankan Railway.
An official statement here said on Wednesday that the two Concessional Loan agreements were signed during a three day visit by P. B. Jayasundera, Secretary to the Ministry of Finance of Sri Lanka and a delegation from the External Resources Department and Attorney General’s Department to Beijing from March 3 to 5.
It said that the Finance Secretary had very productive discussions with the Exim Bank officers in fast-tracking many infrastructure development projects being evaluated by the Bank for future funding, particularly in the Northern and Eastern Provinces of Sri Lanka.
“Emphasis was laid on speeding up the evaluation process for the construction of the A9 highway”, the statement said and went on to quote the island nation’s Finance Secretary as telling the Vice President of the Exim Bank Zhu Hong Jie that with the re-election of President Mahinda Rajapaksa, the Government’s development focus and the strategic plan set in place would progress unhindered.
“He explained that a vital ingredient for the realization of this development plan was the need to fulfil the infrastructure requirement and appreciated China for assisting Sri Lanka at a very crucial stage of her socio-economic development shouldering a major portfolio of the finical requirements. Vice President Zhu commented that China as a sincere friend of Sri Lanka is keen to assist Sri Lanka in her development process”, it said.
The economic relations between Sri Lanka and China in recent times have witnessed a sharp rise. In its report released in the first week of March the Finance Ministry of Sri Lanka said that China has emerged as Sri Lanka's biggest single lender in 2009, overtaking the World Bank and the Asian Development Bank (ADB).
China lent 1.2 billion dollars to build roads, a coal power project and a port in the island's south last year, more than half the total of 2.2 billion dollars in foreign aid in 2009. Project loans accounted for 1.9 billion dollars of the total, with another 279.6 million dollars in grants, the treasury said ahead of the 2010 budget.
In contrast the economic ties of the island nation vis-à-vis the west have somewhat been strained on the subject of alleged human rights violations in the last phases of the war between the Liberation Tigers of Tamil Eelam (LTTE) and the security forces in the course of the Eelam War IV that concluded in May last year. A few days ago the European Union (EU) notified to Sri Lanka that it has decided to withdraw with effect from August what is popular parlance known as GSP + concessions extended to the apparel industry on the ground that the island nation has not fully implemented some of the international conventions on human rights.
To offset the economic losses on account of the strained ties with the allies in the West, President Mahinda Rajapaksa has deepened ties with Japan, India, China and Myanmar, as well as Iran. “The government of China, Asian Development Bank and the World Bank were the three main donors who accounted for 1.9 billion dollars or 84.3 percent of the total commitment in 2009,” the Sri Lanka Finance Ministry report had said. Japan and the Manila-based Asian Development Bank have in the past been the biggest lenders to the island.
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