AIIB Keen to Support Sri Lanka
The Asian Infrastructure Investment Bank (AIIB) is currently re-evaluating Sri Lanka’s economic condition to disburse the approved US$ 180 million worth COVID-19 Emergency and Crisis response facility, Sri Lanka embassy sources said.
However, they said that the AIIB agreed to provide US$ 500 million worth budgetary support, referring to high-ranking Chinese politician and diplomat Yang Jiechi’s recent visit to Sri Lanka and the Sri Lankan President’s telephone conversation with the Chinese President Xi Jinping.
“The budgetary arrangements are in the final stage and we will receive a response soon,” they said.
Speaking to Ceylon FT, they said that the recent decisions taken by the International Credit Rating Agencies to downgrade Sri Lanka's credit rating were AIIB’s major concerning factor for disbursing COVID-19 Emergency and Crisis response facility to Sri Lanka.
“However, negotiations have progressed regarding this COVID-19 assistance and hope that it will be finalized during the second week of February 2021 with perfect economic conditions,” they predicted.
COVID-19 Emergency and Crisis response loan facility is upto USD 180 million and it will be disbursed at US$ 90 million each to Bank of Ceylon (BOC) and People’s Bank. The loan will have a final maturity of seven years, including a grace period of two years and six months.
“We are confident that the AIIB will respond positively to Sri Lanka’s requests. We also discussed debt relief and investment in Sri Lanka’s debt market and Government securities,” they said.
Sri Lanka has already commenced negotiations with the AIIB to secure funding for the Kerawalapitiya – Port second Transmission line project. The expected loan amount is US$ 52 Million and the Project is to construct a new 220k ‘V’ transmission line with an approximately 16km-long underground cable between Kerawalapitiya and Colombo Port.
In May 2020, during the telephone conversation the President of Sri Lanka had with President Xi Jinping, he requested debt relief assistance from China.
Referring to that conversation, Yang Jiechi stated that China encouraged the AIIB to provide budget support to Sri Lanka, during his visit to Sri Lanka in October 2020.
Sri Lanka is a founding member of AIIB. (Joined on 22/06/2016). Sri Lanka is included in the Indonesian Constituency and holds the Alternate Directors position in the Indonesian Constituency.
Sri Lanka has welcomed the creation of the AIIB at the highest level.
There are two projects in Sri Lanka that are currently being implemented with AIIB loan facilities. They are the Urban Regeneration Project (USD 200 million) which was signed on 25/04/2019 and Landslide vulnerability mitigation project (USD 80 million) which was signed on 25/04/2019.
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that aims to improve economic and social outcomes in Asia. The bank currently has 103 members as well as 21 prospective members from around the world.