Sri Lanka's Infrastructure Revival: China EXIM Bank's Role

China's EXIM Bank plans to provide a concessionary yuan loan to Sri Lanka for resuming the halted construction of the central highway. This marks the first loan since Sri Lanka's bankruptcy and IMF-triggered debt restructuring. The proposed loan aims to settle contractor compensation and recommence the project.

China's Export-Import Bank is poised to provide Sri Lanka with a new concessionary loan, President Anura Kumara Dissanayake announced during a parliamentary session. The loan, denominated in yuan, is earmarked for the resumption of the central highway's construction.

Dissanayake confirmed that a cabinet approval would follow next week. If approved, this would be the first loan from the Chinese bank to Sri Lanka since the island faced economic collapse in 2022, subsequently leading to an IMF-driven debt restructuring under a USD 2.9 billion bailout plan.

Post-bankruptcy, Sri Lanka's debt to China stood at USD 4.7 billion, with a significant portion owed to EXIM Bank. The stalled highway project faced equipment damages, and the Chinese firm involved demanded compensation. The proposed loan will enable the Sri Lankan government to settle these issues and restart the project.