Active Development AidData Chinese Aid

CDB provides $1 billion loan in 2018 to help Government of Sri Lanka meet its outstanding debt obligations and shore up foreign exchange reserves (Linked to Record ID#89482, ID#89483, and ID#89484)

¥1M RMB

Funder	China Development Bank (CDB)
Recipient Organization	Government of Sri Lanka
Country	Sri Lanka
Start Date	Oct 12, 2018
End Date	Jun 23, 2032
Duration	5,003 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`71123`

Grant Description

CDB provides $1 billion loan in 2018 to help Government of Sri Lanka meet its outstanding debt obligations and shore up foreign exchange reserves In March 2018, the Government of Sri Lanka solicited proposals from international and domestic banks and investment houses for a Foreign Currency Term Financing Facility (FCTFF) — to be denominated in U.S.

Dollars (USD) or Japanese Yen (JPY) or Euros or some combination thereof — for an amount of up to $1 billion (USD equivalent). 4 proposals were received from international and domestic banks and investment houses.

Through an evaluation and negotiation process, China Development Bank (CDB) was selected as the Government of Sri Lanka’s preferred lender based on price and tenor (maturity length).

Then, on October 12, 2018, China Development Bank and the Government of Sri Lanka signed a $1 billion loan agreement (foreign currency term financing facility agreement).

📋 Loan / Grant Terms

📅 Maturity8 years

⏳ Grace Period3.2 years

Repayment was scheduled to take place in equal semi-annual payments after the end of the 3.2-year grace period.

The proceeds of the loan were to be used by the borrower (the Government of Sri Lanka) to shore up official foreign reserves and meet outstanding debt obligations (i.e. repay other loans). The loan fully disbursed on October 17, 2018. Its amount outstanding was $909,100,000 as of June 30, 2022.

The borrower subsequently signed a $500 million FCTFF with CDB on March 18, 2020 (captured via ID#89482), a $500 million FCTFF with CDB on April 12, 2021 (captured via ID#89483), and an RMB 2 billion term facility agreement with CDB on August 17, 2021 (captured via ID#89484).

All of these loans were designed to shore up foreign exchange reserves and help the Government of Sri Lanka service its outstanding debts. By early 2022, it was clear that the $1 billion CDB loan (issued in October 2018) was non-performing.

On April 12, 2022, the Government of Sri Lanka announced a ‘pre-emptive’ sovereign debt default, noting that it would suspend debt repayments to all external creditors other than multilateral institutions.

Its decision to suspend external debt service reportedly affected all China Development Bank loans with amounts outstanding at the time of the announcement.

📋 Staff Comments

This $1 billion CDB loan is not included in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020.
For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details. The World Bank's Debtor Reporting System (DRS) records a slightly different (5.36%) interest rate. See https://www.dropbox.com/scl/fi/8uoxgcsnkffgmuc16110x/Private-Chinese-Loans-to-Sri-Lanka-November-2023-DRS-Data-Extraction.xlsx?rlkey=32zh29r0xhua8pjkrcifekdfd&dl=03. One source refers to CDB as the ‘syndicate arranger’ of the loan, which suggests that other lenders may have been involved in the transaction. This issue merits further investigation.
The Government of Sri Lanka loan key number is 2018044.

📚 Sources & References

Sri Lanka accepts $1 billion, eight-year syndicated loan from China
The Government of Sri Lanka secured USD 1 Billion Foreign Currency Term Financing Facility
New Chinese Loan May Further Plunge Sri Lanka Into Debt Trap
Sri Lanka accepts a US$1 billion, eight-year loan from China Development Bank
Sri Lanka receives US$ 1 billion long term concessionary loan from China Development Bank
ANNUAL REPORT 2018 MINISTRY OF FINANCE SRI LANKA
Sri Lanka secures US$1 bn Chinese loan
CB plans sovereign bond issue this year
Two big contracts for Chinese companies, talks to get US$ 500 million from China bank
外债偿还即将到期，斯里兰卡接受中国10亿美元主权贷款
China Development Bank team in town to sign new $ 500 m funding, $1 billion from China Development Bank to reach Sri Lanka today
Annual Report 2018
ANNUAL REPORT 2018
Sri Lanka turns to China rather than IMF to avoid default
Annual Report 2018 Chapter 6: Fiscal Policy and Government Finance
Performance Report 2018
China's Overseas Finance report on Souapiti
Sri Lanka signs USD 500 million Financing Facility Agreement with China Development Bank
CS-DRMS Report 814
The Export-Import Bank of China
Disbursements in 2014 January to December.pdf, 814 Disbursements Jan to Dec 2015
Disbursement from January to December 2016.pdf, 814-1 Annual 2017 for WEB New.pdf
Transactions For the period from to 2019/01/01 2019/12/31, 814 up to Oct 2018.PDF
Transactions For the period from to 2020/01/01 2020/12/31
Transactions For the period from to 2021/01/01 2021/11/30
Actual Disbursement by Transaction Date
FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31ST DECEMBER 2018
FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31ST DECEMBER 2019
FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31ST DECEMBER 2021
Instrument-wise Details of Central Government External Debt obtained under Foreign Law as at 2022/06/30
FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31 ST DECEMBER 2020 Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.