China extends $500 million loan to Lanka

This is the second instalment of the $1 billion loan sought by Colombo last year

China on Monday signed a $500 million loan agreement with Sri Lanka, in a move that Colombo hopes would boost its foreign reserves that are under severe strain since the pandemic struck last year. This is the second instalment of the $1 billion loan sought by Sri Lanka last year. The first was released in March 2020, just as the pandemic hit Sri Lanka. The approval comes a month after Sri Lanka obtained a currency swap facility from China for $1.5 billion. Meanwhile, the Beijing-based Asian Infrastructure Investment Bank (AIIB) also sanctioned Sri Lanka’s request for a $180 million loan in February. Sri Lanka already owes more than $ 5 billion to China from past loans. Speaking over telephone with President Gotabaya Rajapaksa last month, Chinese President Xi Jinping assured Sri Lanka of “as much assistance as China’s capacity allows”, in the fight against COVID-19.