Sri Lanka signed a loan deal with China on Tuesday worth 2 billion renminbi (USD 308 million) to support its COVID-19 response, economic recovery and financial stability, the Chinese embassy said.
“China Development Bank and the Government of Sri Lanka today (August 17) signed an agreement of RMB 2 billion (approximately Rs 61.5 billion), at the request of Sri Lanka to support its #COVID19 response, economic upturn and financial stability. support and improve livelihoods,” the embassy tweeted.
The latest loan is part of a previously agreed budget support of $1.2 billion. Sri Lanka has received USD 1 billion in credit support in April 2021 and March 2020 in two tranches of USD 500 million each.
The coronavirus pandemic has seriously shaken the Sri Lankan economy, which relies on the tourism industry.
Earlier in February, Sri Lanka entered into a USD 400 million currency swap facility with India to bridge financial tensions.
Speculation that Beijing is trying to lure Sri Lanka into a debt trap has been flatly rejected by the government led by President Gotabaya Rajapaksa.
Struggling to repay more than $8 billion in Chinese loans and investments, the previous Sri Lankan government had transferred the majority share of the China-built strategic southern port of Hambantota to a Chinese state-owned company with a 99-year lease in 2017.