Sri Lanka signs $1 billion loan with China to build highway

China Sri Lanka flags

Sri Lanka signed a $989-million loan with China’s Exim Bank on Friday to build a highway linking the centre of the Indian Ocean island to a Chinese-built seaport in the south, the Sri Lankan finance ministry said.

As part of its String of Pearls strategy to build a network of friendly ports across Asia, China has swept into Sri Lanka to build ports, power plants and highways in the island, located near busy international shipping lanes.

The loan for a highway from the port of Hambantota to a planned industrial zone in the central region of Kandy, known for tea, spices and tourism, was the single largest approved by the Exim bank for Sri Lanka, the finance ministry said.

“Strengthening financial cooperation in the field of infrastructure development, the Export-Import Bank of China has agreed to provide a concessional loan amounting to $989 million,” it added.

Sri Lankan finance ministry official R.H.S. Samaratunga and China’s ambassador Cheng Xueyuan signed the agreement in Colombo, the finance ministry said.

The loan, signed after four years of negotiations, is part of China’s latest push in Sri Lanka, in the face of criticism that a big Chinese port project and related infrastructure are dragging the country of 21 million people deep into debt.