Active Development AidData Chinese Aid

CDB provides $500 million loan in 2020 to help Government of Sri Lanka meet its outstanding debt obligations and shore up foreign exchange reserves (Linked to Record ID#71123, #89483, and #89484)

$500K USD

Funder	China Development Bank (CDB)
Recipient Organization	Government of Sri Lanka
Country	Sri Lanka
Start Date	Mar 18, 2020
End Date	Oct 15, 2031
Duration	4,228 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`89482`

Grant Description

CDB provides $500 million loan in 2020 to help Government of Sri Lanka meet its outstanding debt obligations and shore up foreign exchange reserves On March 18, 2020, China Development Bank (CDB) and the Government of Sri Lanka signed a $500 million loan agreement (foreign currency term financing facility agreement or FCTFF).

📋 Loan / Grant Terms

📅 Maturity10 years

⏳ Grace Period3 years

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 FCTFF agreement was signed by Mr. S.R.Attygalle, Secretary to the Treasury on behalf of the Government of Sri Lanka and Mr.

Wang Wei, Deputy Director-General, China Development Bank on behalf of the China Development Bank. The signing of the agreement was witnessed by the Hon. Prime Minister Mahinda Rajapaksa, Chargé d'affaires of the Chinese Embassy Mr. Hu Wei, and Vice President of CDB Mr. Ma Xin. The loan fully disbursed on March 23, 2020.

The loan’s outstanding amount was $500,000,000 as of June 30, 2022.

There are some indications that this CDB loan may have financially underperformed vis-a-vis the original expectations of the lender.

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. As of March 2023, the Government of Sri Lanka had accumulated $338 million in arrears to China Development Bank.

📋 Staff Comments

AidData has estimated the all-in interest rate (3.464%) by taking the average 6-month LIBOR rate during the month and year (March 2020) when the loan agreement was finalized (0.964%) and adding a 2.5% margin. The World Bank's Debtor Reporting System (DRS) records a slightly different (3.6852%) 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=0.
The borrower signed a $1 billion FCTFF with CDB on October 12, 2018 (captured via Project ID#71123), a $500 million FCTFF with CDB on April 12, 2021 (captured via Project ID#89483), and an RMB 2 billion term facility agreement with CDB on August 17, 2021 (captured via Project ID#89484). Sri Lanka’s Ministry of Finance, Economy and Policy Development identifies the 2020 FTFF as an ‘upsizing’ of the 2018 FTFF 2018. Therefore, AidData assumes that the purposes of the 2020 FTFF and 2018 FTFF are identical.
The Government of Sri Lanka loan key number is 2020008.
Some official sources refer to this CDB loan as Second Integrated Road Investment Program - Tranche 2.
Some official sources suggest that the loan commitment date is November 13, 2019 rather than March 23, 2020. This issue warrants further investigation.

📚 Sources & References

DRS Official Commitments from China through 2020
USD 500 Million facility agreement Signed between Sri Lanka and China
Annual Report 2020
FISCAL MANAGEMENT REPORT 2022
驻斯里兰卡使馆临时代办胡炜出席中斯贷款协议签约仪式
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.

All Grantees

Government of Sri Lanka

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